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BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
*iU$mBill a*
WASHINGTON
R-760
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 2, 1941
Dear Sir:
There is enclosed for your information a copy of a letter
addressed to the American Bankers Association by the Comptroller
General of the United States with regard to the advice which that
office, upon request, will give as to whether or not any prior notice of assignment of a claim under a Government contract has been
filed in that office.
You will recall that in our letter of December U> 1940, relating to procedure under the Assignment of Claims Act of 1940, it
was suggested that banks which consider it necessary to ascertain
whether previous assignments of particular claims have been made may
wish to address inquiries to the Comptroller General of the United
States or to the disbursing officer, if any, designated in the contract to make payment. At that time we had not received written advice of the action which the office of the Comptroller General would
take upon such inquiries, and the enclosed letter confirms our informal understanding of the position of the Comptroller General 1 s
officc with respect to this matter.
It may be noted that we have received a suggestion from
one individual that in each case where notice of assignment is filed
it would be desirable for the assignee bank to obtain advice from
all of the places where such notice is filed that no prior notice of
assignment under the particular contract has been filed. This possible procedure was considered when Circular No. 447 of the Director
of Procurement was prepared but it was felt that it would be unduly
burdensome to suggest that in every case advice be obtained from all
of the places where the notice of assignment is filed that no prior
notice of assignment under the particular contract had been filed.
It was felt that in most cases, as a practical matter, the obtaining
of advice of no prior notice of assignment from one of the places
where the bank filed notice of its assignment would be sufficient.
However, if in any particular case an assignee bank feels that it is
ICTORYno>- adequately protected by such advice, it may wish to request
BUY
WAR
STAMPS
advice as to whether or not there is any such prior notice of assignment from all of the places at which it files notice of its
assignment.
A copy of this letter is being mailed to each officer designated as a field representative at your Bank and branches, if any.
Very truly yours,
Chester Morrill,
Secretary
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FIELD REPRESENTATIVES
R-760-a
November 18, 1940
The American Bankers Association
22 East 40 Street
New York, New York
Gentlemen:
There has been received from the office of your General
Counsel, Washington, D. C., a letter of November 15, 1940, in which,
with reference to the assignability of Government contracts, it is
stated:
"If you will be kind enough to write me what Regulation 0. M.
13208 sets forth as to the proper procedure, we shall appreciate it.
We would also like to know what steps your office will take to notify
a. bank as to the existence of prior assignments, if any.
"Inasmuch as we are endeavoring to get out a communication to
our members as soon as possible, we are having " meeting in New York
Monday morning, November 18. I would appreciate it if you could send
me this information to our New York office by Monday."
The Assignment of Claims Act of 1940, Public No. 811, 76th
Congress, approved October 9, 1940, provides:
"That sections 3477 and 3737 of the Revised Statutes be amended
by adding at the end of each such section the following new paragraph:
"'The provisions of the preceding paragraph shall
any case in which the moneys due or to become due from
States or from any agency or department thereof, under
providing for payments aggregating §1,000 or more, are
a bank, trust company, or other financing institution,
Federal lending agency: Provided,
not apply in
the United
a contract
assigned to
including any
" '1. That in the case of any contract entered into prior to the
date of approval of the Assignment of Claims Act of 1940, no claim
shall be assigned without the consent of the head of the department
or agency concerned;
"'2. That in the case of any contract entered into after the
date of approval of the Assignment of Claims Act of 1940, no claim
-2-
R-760-a
shall be assigned if it arises under a contract which forbids such
assignment;
"'3. That unless otherwise expressly permitted by such contract
any such assignment shall cover all amounts payable under such contract and not already paid, shall not be made to more than one party,
and shall not be subject to further assignment, except that any such
assignment may be made to one party as agent or trustee for two or
more parties participating in such financing;
4. That in the event of any such assignment, the assignee
thereof shall file written notice of the assignment together with a
true copy of the instrument of assignment w i t h —
'"(a)
the General Accounting Office,
"'(b) the contracting officer or the head of his
department or agency,
'"(c) the surety or sureties upon the bond or bonds,
if any, in connection with such contract, and
"'(d) The disbursing officer, if any, designated in
such contract to make payment.
.
Notwithstanding any law to the contrary governing the validity of assignments, any assignment pursuant to the Assignment of Claims Act of
194-0 shall constitute a valid assignment, for all purposes.'
"Any contract entered into by the War Department or the Navy
Department may provide that payments to an assignee of any claim arising under such contract shall not be subject to reduction or set-off,
and if it is so provided in such contract, such payments shall not be
subject to reduction or set-off for any indebtedness of the assignor
to the United States arising independently of such contract.
"Sec. 2.
of 1940'."
This Act may be cited as the 'Assignment of Claims Act
This office has not prescribed, and does not contemplate prescribing standard forms of notice or assignment for use in connection
with assignments under the said act, and any requests for information
concerning an assignment under a contract should be addressed, generally, to the particular Government agency involved. It should be noted,
in this connection, that the act specifically requires that the consent
of the head of the department or agency concerned must be obtained to
the assignment of a claim under a contract entered into prior to the
date of approval of the act, October 9, 194-0.
-1-.
R-760-a
The act provides that, in the event of an assignment thereunder, the assignee shall file written notice thereof, together with
a true copy of the assignment, with this office, but there is no requirement that this office acknowledge receipt of such notice and
assignment or that it furnish information as to prior assignments.
Obviously, this office cannot undertake to furnish conclusive information to assignees or prospective assignees as to whether there have
been any prior assignments. However, upon request, this office will
by letter—or by telegraph, collect, if specifically requested—
acknowledge receipt of the notice and true copy of an assignment
filed here and advise whether it appears from an examination of the
pertinent contract records of this office that a notice of any prior
assignment has been filed here.
Respectfully,
(Signed)
Lindsay C. Warren
Comptroller General
of the United States.
R-761
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
January 4, 1941
For immediate release
Preliminary figures received from the Federal Reserve Banks
indicate that their current earnings during 1940 amounted to $43,537,000,
or $5,037,000 more than in 1939.
Current expenses totaled $29,165,000,
which was $518,000 more than in the previous year.
for 1940 were $14,372,000, as compared •with
Current net earnings
$9,854,000 in 1939.
Net additions to current net earnings amounted to $11,488,000
and consisted principally of profits from sales of United States Government securities less charge—offs on bank premises and reserves for losses
on industrial advances.
Net earnings for the year were $25,860,000, an
increase of $13,617,000 over net earnings for 1939.
The net earnings for 1940 were distributed as follows:
Dividends
to member banks, $8,215,000; payments to the U. S. Treasury under provisions
of Section 13b of the Federal Reserve Act relating to industrial advances,
$82,000? net additions to surplus accounts, $17,563,000.
Of the amount
added to surplus, $12,273,000 was transferred to reserves for contingencies.
R-762
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Statement for the Press
For release in morning papers,
Wednesday, January 8, 191+1«
The following statement of industrial
production in December and the year
191+0 will appear in the January issue
of the Federal Reserve Bulletin,
Estimates now available for December indicate a figure of about
136 for the Board's seasonally adjusted index of industrial production as
compared with 133 i% November and 129 in October.
Actual volume of output,
which usually declines in November and December, showed little change during this period and was about 7 per cent greater than in the peak period at
the end of the previous year.
In December the seasonally adjusted index of
durable manufactures apparently showed a rise of about 5 points to 160 per
cent of the 1935-1939 average and nondurable manufactures rose 2 points to
122, while minerals remained unchanged at 118.
For the year 1940 as a whole the Board's index averaged 122 as
compared with 108 in 1939, 113 in 1937, and 110 in I929.
The rise over
1939 was most marked in output of durable manufactures but, as the table
indicates, nondurable manufactures and minerals also increased materially.
The increase over 1929 for the year I9I+O was almost entirely in nondurable
manufactures and in minerals, but by December I9I+O production of durable
manufactures was substantially above the high point reached in the summer
of 1929.
As has been indicated elsewhere, particularly in the Federal
Reserve Bulletin for September I9I+O, the index of industrial production
should not be taken as a single adequate measure of the economic well-being
of the nation.
Especially over long periods considerable allowance needs
to be made, not only for changes in the nature and quality of industrial
products, but also for many other developments, including changes in other
types of production, in foreign trade, in the size and composition of the
population, and in the division of income.
Industrial Production
(1935-39 average » 100)
Year
IndusDurNontrial
Manudurable
able
Minproduc- factures
manuerals
manution
factures factures
1929
110
110
133
93
107
1932
1933
58
69
68
57
41
70
79
66
76
103
113
88
108
122
104
113
87
108
123
108
122
78
108
135
100
106
95
108
113
99
112
97
106
117
1936
1937
1938
1939
19U0*
5b
*A11 1940 figures are preliminary estimates.
Preliminary annual estimates for the various group indexes are
shown in the table on the following page.
The largest increases for the
year, as compared with 1939* were in the metals, machinery, and transportation equipment groups of industries.
Production was larger than for any
previous year in most groups, the principal exceptions being lumber,
leather, and alcoholic beverages.
A
I
3 5
Industrial Production
(1935-39 average = 100)
Year
Minerals
Nondurable manufactures
Durable manufactures
NonStone,
ManPrint- PetroTrans- fer- Li umclay, Tex- Leath- ufac- A1 co—
To- Paper
ing
leum ;
Iron Ma- porta- rous ber
and
tiles er and tured holic bacco and
and
and Chemand chin- tion metals and
glass
and
prod- food bever- prod- prodpub- coal icals
steel ery equip- and
prod- prod- prod- ucts prod- ages ucts
ucts 1 ish- prodment
prod- ucts
ucts ucts
ucts
ing
ucts
ucts
1929
135
1932
1933
33
55
1936 : 114
123
1937
68
1938
114
1939
1914.0*
130
k3
50
105
126
82
IO4
135
13k
136
li+6
110
38
1+8
52
60
51
63
51
111
104
121+
125
80
70 |
100
111+
145
105
113
90
106
116
103
11!+
92
112+
120
13k
5b
•All I9I4O figures are preliminary estimates.
Rubber
prod- Fuels MstaLs
ucts
i
9k
95
101
-
71
88
76
88
79
83
-
104 ' 103
98
109
102
106
108
103
85
93 | 101 1
96
112
108
10U
98
101
113
95
1 1 5
!
96
85
10l+
96
89
79
80
65
76
74
75
69
68
76
99
103
102
106
109
98
107
95
lli+
122
99
109
96
106
110
97
108
100
110
116
lh
99
112
96
I0Z4115
100
6k
103
13k
77
72
80
35
50
107
10l+
83
113
118
99
109
99
105
lll+
102
127
86
113
133
BOARD OF G O V E R N O R S
±0
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-763
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 8, 19-4-1.
Dear Sir;
We have just obtained from the National
Defense Commission a few copies of forms that nay be
used in applying for necessity certificates, certificates of nonreimbursement, and certificates of
Government protection.
These forms arc not official
and their use is not required.
One copy of each
forn is enclosed herewith for the information of
your field representative.
Since we have been able
to obtain only a. few copies, xve are not sending copies
to your branches.
Very truly yours,
E. L. Snead, Chief,
Division of Bank Operations
Enclosures 3
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BAN2S
(Enclosures rdth addressed copies only.)
JLl
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-7&U
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 10, 19U1
Dear Sir:
During the Conference on Small Business
Activities in relation to the Defense program held
in Washington on November 12 and 13, Mr, Stacy May
distributed to those attending the Conference a
pamphlet on Value of Defense Contracts Awarded by
Federal Reserve Districts and Industrial Areas,
which was prepared by the Bureau of Research and
Statistics of the National Defense Advisory Commission. We have now received from Mr. May's office
a report showing "Major Defense Contracts Awarded
by War and Navy Departments between June 1 and
November 30, 19I4.O, listed by Federal Reserve District".
Five copies of this report are being forwarded to the
field representative at your head office and two copies
to each of your branches, if any*
We expect to write you shortly in regard
to the use that may be made of this report.
Very truly yours,
Et L, Smead, Chief,
Division of Bank Operations.
TO THE PRESIDE®: OF EACH FEDERAL RESERVE B A M
COPY TO FIELD REPRESENTATIVES
±2
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM R_?65
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 11, I9I4I
Dear Sir:
Referring to the Board's letter R-593 of January 10,
19U0, there are enclosed 25 copies of the list of nonmember
banks that have in force agreements with the Board pursuant
to the provisions of Section 8(a) of the Securities Exchange
Act of I93I4., as revised to include changes reported to the
Board through December 31» I9I4O.
There is also enclosed, for your information, a
statement showing banks which were included in the corresponding list dated December Jl, 1939 wid which are no longer
in operation as nonmember banks.
Very truly yours
L, P. Bethea,
Assistant Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
LIST OF NONMEMBER B A M S WHICH HAVE IN FORCE AGREEMENTS FILED WITH
THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM PURSUANT TO
THE PROVISIONS OF SECTION 8(B) OF THE SECURITIES EXCHANGE ACT OF 1931+
(Does not contain names of banks which are no longer in operation as
no member banks. If name of bank has been changed since the
agreement was filed, only the current name is listed.)
Nonmember Banks with Principal Places of Business in the United States
California
Anaheim
Oakland
it
Patterson
San Diego
San Francisco
it
Stockton
Connecticut
Bridgeport
Darien
Hartford
n
New Haven
Stamford
The Southern County Bank
Central Bank
Farmers and Merchants Savings Bank of Oakland
Commercial Bank
San Diego Trust & Savings Bank
Bank of Montreal (San Francisco)
The Canadian Bank of Commerce (California)
Stockton Savings and Loan Bank
The
The
The
The
The
The
West Side Bank
Home Bank and Trust Company of Darien
Hartford-Connecticut Trust Company
Park Street Trust Company
Community Bank and Trust Company
Fidelity Title & Trust Company
Delaware
Dover
Wilmington
Farmers' Bank of the State of Delaware
Delaware Trust Company
Idaho
Lewiston
Pocatello
American Bank & Trust Company
Idaho Bank and Trust Co.
Illinois
Chicago
Oak Park
Banco di Napoli Trust Company of Chicago
Prairie State Bank
Indiana
English
Jeffersonville
Iowa
Waterloo
English State Bank
Citizens Trust Company
The Clark County State Bank
The Waterloo Savings Bank
R-765a
Kentucky
Beaver Dam
Brandenburg
Campbellsburg
Carrollton
Cave City
Dayton
Gravel Switch
Hardinsburg
Harrodsburg
Hawesville
Hopkinsville
LaGrange
Magnolia
Monterey
Munfordville
New Hope
North Pleasureville
Owingsville
Pineville
Sadieville
Sharpsburg
Shelbyville
Springfield
Taylorsvilie
Upton
Maine
Rockland
Maryland
Baltimore
The Beaver Dam Deposit Bank
Farmers Deposit Bank
United Farmers Bank
Kentucky State Bank
The H. Y. Davis State Bank
State Bank
Peoples Bank
Farmers Bank
State Bank & Trust Co,
Hawesville Deposit Bank
First-City Bank & Trust Company
First State Bank
Bank of Magnolia
The First State Bank
Hart County Deposit Bank
The Peoples Bank
The Central Bank
Owingsville Banking Company
First State Bank
Farmers-Deposit Bank of Sadieville
Citizens Bank
Bank of Shelbyville
Citizens Bank
The Farmers and Traders Bank
Springfield State Bank
Peoples Bank
The Davis Banking Company
Knox County Trust Company
The Equitable Trust Company
Mercantile Trust Company of Baltimore
Massachusetts
Boston
Clinton
Lawrence
Lynn
North Adams
Worcester
Stabile Bank and Trust Company
Clinton Trust Company
Arlington Trust Company
Essex Trust Company
North Adams Trust Company
Guaranty Bank & Trust Co.
Michigan
Detroit
Hudson
Commonwealth Bank
Hudson State Savings Bank
R-765a
""
Missouri
St. Louis
Hew Jersey
Asbury Park
Atlantic City
Chatham
Guttenberg
Hammonton
Jersey City
tt
Trenton
ri
Union City
Woodbury
New York
Albion
Auburn
Berlin
Brooklyn (New
York City)
!1
Clarence
Cortland
Foreat Hills (New
York City)
Hudson
Jamestown
Kenmore
Medina
Newburgh
New York City
Tt
IT
TT
Tt
Tt
tt
tt
Tt
TT
Tt
North Tonawanda
Oyster Bay
Randolph
Riverhead, L. I.
5
"
A S
Mutual Bank and Trust Company
Asbury Park and Ocean Grove Bank
Guarantee Bank and Trust Company
The Chatham Trust Company
Guttenberg Bank and Trust Co.
Peoples Bank and Trust Company
Bessemer Trust Company
The Trust Company of Mew Jersey
The Trenton Banking Company
Trenton Trust Company
Hudson Trust Company
Woodbury Trust Company
Marine Midland Trust Company of Albion
Auburn Trust Company
Whu H. Seward & Co,
laconic Valley Bank
Citizens Bank of Brooklyn
Kings County Trust Company
Bank of Clarence
The Marine Midland Trust Company of Cortland
Boulevard Bank
Hudson River Trust Company
Union Trust Company of Jamestown, N. Y.
State Bank of Kenmore
Medina Trust Company
The Columbus Trust Company
The Bank of Athens Trust Company
Brown Brothers Harriman & Co.
Empire Trust Company
Fiduciary Trust Company of New York
French American Banking Corporation
Heidelbach, Ickelheimer & Co,
Laidlaw & Company
J. P, Morgan & Co. Incorporated
Savings Banks Trust Company
Title Guarantee and Trust Company
Underwriters Trust Company
State Trust Company of North Tonawanda
Oyster Bay Trust Company
State Bank of Randolph
Long Island State Bank & Trust Company
R—7653.
— — ll
"ev,- York (Continued)
Rochester
Tonav/anda
Troy
Genesee Valley Trust Co.
Rochester Trust & Safe Deposit Company
Security Trust Company of Rochester
Union Trust Company of Rochester
The First Trust Company of Tonawanda
The Troy Trust Company
Jeffersonville
Lisbon
Ottoville
Sugarcreek
Warren
The Milledgeville Bank
The Firestone Bank
The Ottoville Bank Company
Citizens Bank
The Union Savings & Trust Company
Ohio
Pennsylvania
Abington
Altoona
Philadelphia
Pittsburgh
Pottsville
Prospect Park
Rankin
Abington Bank & Trust Company
The Altoona Trust Company
Land Title Bank and Trust Company
Liberty Title and Trust Company
Mitten Bank and Trust Company
Northern Trust Company
North Philadelphia Trust Company
The Real Estate Trust Company of Philadelphia
Wyoming Bank and Trust Company
The Arsenal Bank
Safe Deposit Bank of Pottsville
Prospect Park State Bank
The Rankin Bank
Tennessee
Covington
Paris
Tipton County Farmers Union Bank
Commercial Bank & Trust Co.
Texas
Houston
Houston Land & Trust Company
Utah
Salt Lake City
First Security Trust Company
Zion's Savings Bank and Trust Company
Vermont
Barton
Bellows Falls
Brattleboro
The Barton Savings Bank and Trust Company
Bellows Falls Trust Company
Brattleboro Trust Co.
Wisconsin
Cudahy
Marshfield
Cudahy State Bank
Central State Bank
R-7&5&
18
Nonmember Banks with Principal Places of Business in Territories,
Insular Possessions, or Foreign Countries
Canada
Montreal
Toronto
England
London
"
France
Paris
Hawaii
Honolulu
Italy
Milan
Switzerland
Basle
Zurich
December 31, I9I4.O
Bank of Montreal (including agencies at New
York City, Chicago, and San Francisco)
The Royal Bank of Canada (including agency
at New York City)
The Bank of Nova Scotia (including agencies
at New York City and Boston)
The Canadian Bank of Commerce (including
agencies at New York City, Portland, Ore.,
San Francisco, and Seattle)
The Dominion Bank (including agency at
New York City)
Banque Beige pour l'Etranger (Overseas)
Limited (including agency at New York City)
Barclays Bank (Dominion, Colonial and
Overseas) (including agency at New York
City)
Societe Generale pour favoriser le
developpement du Commerce et de
1'Industrie en France
(including agency at New York City)
Bank of Hawaii
Bishop National Bank of Hawaii at Honolulu
Banca Commerciale Italiana (including agency
at New York City)
Swiss Bank Corporation (including agency
at New York City)
Credit Suisse
(including agency at New York City)
R-765a
BANKS INCLUDED IN THE DECEMBER 31, 1939 LIST (R-593a) OF BANKS WHICH HAD
IN FORCE AGREEMENTS WITH THE BOARD PURSUANT TO THE PROVISIONS OF SECTION
8(a) OF THE SECURITIES EXCHANGE ACT OF 1931+, BUT WHICH ARE NO LONGER IN
OPERATION AS NONMEMBER BANKS
Indiana
West College Corner
(P.O. College Corner, Ohio)
Missouri
""
Kansas City
New Jersey
North Bergen
New York
New York City
TexasHouston
Wisconsin
Milwaukee
TJ
The Farmers State Bank of West College
Corner, Indiana
(Admitted to Federal Reserve membership
on May 28, 1 9 W )
Mercantile Home Bank & Trust Company
(Admitted to Federal Reserve membership
on December 12, I9I4.O)
Woodcliff Trust Company
(Absorbed by the Commonwealth-Merchants
Trust Company, Union City, N. J., on
February 3, 1 9 W )
Banca Commerciale Italiana Trust Company
(Absorbed by Manufacturers Trust
Company, New York, on February II4, 1939»
and formally dissolved on May 6, I9I4.O)
Guardian Trust Company of Houston
(Admitted to Federal Reserve membership
on December 27, 19i|-0)
Northern Bank \J
(Admitted to Federal Reserve membership
on December 23, 19^4-0)
The Northern Bank was not included in the list dated December 31,
1939, but was added to that list by the Board's letter of
October 10, 19^0 (R-712).
December 31, 1 9 W
R-765b
BOARD OF G O V E R N O R S
OF THE
i
FEDERAL RESERVE SYSTEM
%
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
January 11, I9I4I
R-766
Dear Sir:
In order to provide a current statistical analysis of the
reserve position of member banks, it m i l be appreciated if you will
furnish the Board with the following data:
1. Summary statements in accordance with the attached
form R~?66a covering, respectively, (l) central reserve city
banks (if any), (2) reserve city banks, (3) country banks in
places with a population of 100,000 or more according to the
I9I4.O census, (1;) country banks in places with a population of
15,000 or more but less than 100,000, and (5) country banks in
places with a population of less than 15,000* Banks in central
reserve cities with permission to carry the same reserves as
banks in reserve cities should be classified as reserve city
banks, and banks in central reserve and reserve cities with
permission to carry the same reserves as banks outside such
cities should be classified as country banks. The enclosed
mimeographed statements issued by the Bureau of the Census
may be used in making the population grouping of country banks,
2. A supplementary statement showing the information
called for by form R«»766b, attached, covering (l) each member
bank included in the first two percentage groups on form
R-766a, and (2) each member bank not included in these two
percentage groups but which on December $1, 19U0 reported
"due to" domestic banks amounting to more than one-third of
"due from" domestic banks.
We should like to have the summary statements on form R-?66a
reach the Board ! s offices not later than Friday, January 31* Accordingly, it is suggested that any of them that cannot be forwarded by
regular mail or air mail in time to reach the Board's offices on that
date be telegraphed. If a statement is telegraphed the code words
shown on form R-?66a should be used to designate the various items of
information called for by the form. The supplementary statements on
form R-766b should be mailed in time to reach the Board T s offices by
February 3, if practicable. It will be observed from the instructions
appearing on form R-7&6a that reports of deposits for the semi-monthly
-
2
R-766
-
period ended December 15, 19U0 may be used in lieu of reports for the
semi-monthly period ended January 15, 19Ul, in so far as that may be
necessary to insure our reocipt of the summary data on time. It is
highly desirable, however, that the number of banks for which such
substitutions are made be kept at a minimum. Accordingly* special
efforts should be made to obtain a current report of deposits from
every member bank.
A supply of forms R-?66a and R-766b, for your use in
furnishing the Board with the desired data, is ^eing sent to you
under separate cover#
Vory truly yours
L,, P.
Jr. Bothea
Duvnca,
Assistant Secretary,
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
OOHFIBEHTTAT.
0)
ANALYSIS OF AVERAGE RESERVE POSITION OF MEMBER BANKS DURING THE WEEK ENDED WEDNESDAY, JANUARY 15, 19-41
R-766a
(All amounts should be averages of dally figures for the week ended Wednesday, January 15, 1941• Reserve balances should be obtained from the Federal Re—
serve Bank* s books# Deposits and balances due from domestic banks should be obtained from semi-weekly , weekly , and semimontnly reports of deposits submitted for reserve computation purposes# Balances due from domestic banks should correspond /with column 2 in such reports and, accordingly% should exclude
cash items in process of collection* If, in the case of a few country banks, the reports of deposits for the semi-monthly pepiod ended January 15, 1941
are not received in sufficient time, the daily averages for the entire semi-monthly period ended December 159 1940 may be substituted in so far as eposi s
and balances with domestic banks are concerned, but reserve balances should in all cases cover the week ended January 15, 1941* In such cases he Boar
should be furnished by mail with a statement showing the flame and location of each bank for which a substitution was made, also the amounts of i s ne
demand deposits* time deposits, reserve balances, and balances due from domestic banks* A revised summary report on this form should be rendered o
e
Board as soon as the missing reports of deposits have been received* See accompanying letter for further instructions*)
Federal Reserve District
Percentage ratios of reserve
balances to twice basic
statutory reserve
requirements 1/
Class of banks
Total '
number
Net
of banks
in the
demand
percent- deposits
age
group
ADAR
ABAK
Time
deposits
AFAM
Basic
statutory
reserve
requirements
doubled]/
ANON
^
Reserve
balances
AGRA
Excess of
reserve bal- Balances
ances over due from
twice basic domestic
banks
statutory
reserve requirements
AHOY
ACAD
(Amounts in thousands of dollars)
Number of banks with the following ratios
of balances due from domestic banks to
twice basic statutory resefve requirements
50% or 100% or 150% or
more but more but more but 200%
Less
or
less than less than less than
than
more
200%
150%
100%
50%
AREA
APIK
AM0L
ALIN
AEER
2/
1# Less than 100
2. 100 or more but less than 125.... 2/
125 "
"
"
»
"
150,..,.
4. 150 «
»
»
»
»
175...
5. 175
w
n
M
"
"
200
6. 200 or more
7. Total
X/ Basio statutory reserve requirements, doubled, on net demand deposit*are 26 per cent for central reserve city banks, 20 per cent for reserve city banks,
and 14 per cent for country banksj o# time deposits6 per cent for all classes of member banks*
2/ A supplementary statement on form R- 766b should be furnished covering each of these banks and each bank which, on December 31, 1940, reported "due to*
donestid,' banks amounting to more than one-third of "due from11 domestic banks*
R-?66b
SUPPLEMENTARY STATEMENT FOR ANALYSIS OF AVERAGE RESERVE POSITION
OF MEMBER BANKS DURING THE WEEK ENDED JANUARY 15, I9I4I
Name of bank
Classj/
Location:
City
_____________
F.R.District No.
State
(Thousands
of dollars)
Daily Average Figures
1. Net demand deposits
___________
2. Time deposits
3. Basic statutory reserve requirements, doubled
I4.. Reserve balance
5. Excess of reserve balance over twice basic statutory
reserve requirements
___________
6. Balances due from domestic banks
___________
7. Per cent, item h
item 3
8. Per cent, item 6
-4- item 3
December 31* 1 9 W Figures
9. Reserve balance (call report Schedule D, item 7)
10. Due from domestic banks (call report Schedule D, item 2)
. .
11. Due to domestic banks (call report Schedule E, item ij.) . . .
-/Central reserve and reserve city banks should be designated "central reserve
city" and "reserve city" as the case may be; country banks should be designated as "country-100,000", "country-15,000 to 100,000", or "country-under
15,000", depending on the population of the places in which located.
BOARD OF G O V E R N O R S
^ 4
OF THE
FEDERAL RESERVE SYSTEM
R-767
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*********
January 13, 1941.
Dear Sir:
For your information there is enclosed a
copy of Procurement Circular #46, issued by the War
Department on December 31, 1940. One copy of the
circular has been mailed to the field representative at each of your branches, if any.
As you v/ill note, this circular has been
distributed to contracting officers of the Army
and relates to assignment of claims and to set offs
of indebtedness of the assignor arising independently from the contract. War Department Circular
AR-5200, of which Procurement Circular #46 is an
amendment, relates to the duties of procurement
officers and is not available for distrubution to
the Federal Reserve Banks.
Very truly yours,
E. L. Smead, Chief,
Division of Bank Operations*
Enclosure
TO THE FIELD REPRESENTATIVE OF EACH FEDERAL RESERVE BAIIK
COPY TO FIELD REPRESENTATIVES AT ALL BRANCHES
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-768
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 1-4- 1943L
Dear Sir:
There is enclosed for your information a copy
of a letter, dated January 7, 1941, from Mr, Henry H.
Heimann, Executive Manager, National Association of
Credit Men, to which is attached a list of the Association's local offices throughout the United States.
Mr. Heimann states he has had many letters
suggesting that the local offices of the National Association of Credit Men would be pleased to hold meetings,
inviting all small business executives to attend, if
representatives of the Reserve Banks would address the
meetings and explain the Defense Program. Mr. Heimann
suggests that the Reserve Bank field representatives
contact these local offices*
I have advised Mr. Heimann that I would forward
a copy of his letter to you with the suggestion that your
field representatives cooperate fully with the local offices of the National Association of Credit Men in all
matters pertaining to National Defense.
A copy of this letter, with enclosures, has
been sent to the field representative at your head office and each of your branches, if any.
Very trul^jyours,
Enclosures 2
Ernest G. Draper
TO THE PRESIDENTS OP ALL FEDERAL RESERVE BANKS
COPY TO FIELD REPRESENTATIVES
(Enclosures to Presidents and field representatives only)
NATIONAL ASSOCIATION OF CREDIT MEN
R—768a
Executive Offices - One Park Avenue
New York, N. Y.
January 7, 19-4L.
Hon. Ernest Q. Draper
Federal Reserve Board
Washington, D. C.
Dear Ernest$
By bulletin I advised our local offices about
the part the Federal Reserve System would take in developing interest in the defense program anong snail
business enterprises. I have had nany letters suggesting that the local offices would be pleased to hold
meetings at which they would invite all snail business
executives if your representatives would address these
nen and explain the whole program to then. I really
believe this affords you one of the best ways of getting
it before the smaller business executives.
As you know, we have 118 offices throughout
the United States and each one of these local offices
holds monthly meetings. Furthermore, our membership
generally conpnises most of the business orgainzations
in the area. I might suggest that if it were consistent
you may desire to bulletin your representatives asking
them to get in contact with our local offices# You
will find a ready response. Naturally our only purpose
is to try and be helpful in the matter and I do believe we have a medium that could be used to good advantage
and it would be a patriotic service we would be delighted
to undertake* Fbr your information, I am attaching a
list of our various offices.
Sincerely-yours,
(Signed) Henry H. Heinann
Henry H. Heinann
EXECUTIVE MANAGER
HHHlLS
46
NATIONAL ASSOCIATION OF CREDIT MEN
SECRETARY MANAGER LIST AS OF JULY 1940
R—768b
Akron, Ohio - (Branch of Cleveland) Akron Credit Club, J.M.McChesney, First-Central
Trust Co.
Albany, N.Y. -* Eastern N.Y.A.C.H., Clark V.Hendee, P.O.Box 590
Albuquerque, N.Hex. (Branch of El Paso, Tex.) Wholssale C.A. of New Mexico
H. V. Vance, 214 Korber Bldg., P.O.Box 1334
ALlentown, Pa. — Lehigh Valley-Berks Cr.Assn. Inc., J.H.J.Reinhard, 501 Hunsicker
Bldg.
Amarillo, Tex. (Branch of El Paso, Tex.) Tri-State A.C.M., George G. Boyd,
P.O.Box 1S20
Atlanta, Qa., Atlanta A.C.M., C. H. Whi W o r t h , 41 Exchange Place
Austin, Texas — Austin Wholesale Credit Men*s Assn., Inc., Horace C. Barnhart,
P.O.Box 1016
Baltimore, Md., Baltimore, A.C.M., Norman McKinney, 19 E. Fayette St.,
Bellingham, Wash. - Bellingham A. C.M., W. F. Fisher, 520 Bellingham Nat.Bank Bldg.
Billings, Mont., Montana-Wyoming A.C.M., M.J.Davies, 439-441 Stapleton Bldg.
Binghamton, N.Y. - The Triple Cities A.C.M., Miss Catherine O'Domiel, 31 Exchange
St.
Birmingham, Ala. - Alabama A.C.M., W. C. Darby, 516 Lyric Bldg.
Bluefield, W.Va., Bluefield A.C.M., Clyde B. Smith, P.O.Box 449
Boston, Mass., Boston Credit Men*s Assn., Joseph M. Paul, 38 Chauncy St.
Bridgeport, Conn., Bridgeport A.C.M., Miss Anna May Dean, Bridgeport S m t c h Co.
Bristol, Va., Bristol A.C.M., Geo. D. Helms, P.O.Box 333
)
Buffalo, N.Y., Credit Assn. of Western N.Y., Ira D. Johnson, 50 Court St.
Burlington, Iowa, Burlington A.C.M., Jesse L. Thomas, 614—16 I o m State Bank Bldg.
Canton, 0., Canton Chapter of the Cleveland A.C.M,, Robert Wood, 838 Renkert Bldg.
Cedar Rapids, Iowa, Cedar Rapids A.C.M., Milo H. Hanzlik, 619 Higley Bldg.
Charleston. W.Va., Charleston A.C.M., Ira W. Belcher, 804 Qu-rrrier St,
Charlotte, N.C., Credit Men's Assn. of the Carolinas, C.B. Smith, P.O.Box 668
Chattanooga, Tenn,, Chattanooga A. C.M., G. Royal Neese, 1124 Hamilton Natl. Bk.Bldg.
- 2 Chicago, 111., Chicago A.C.M., F.
R
-768b
Z8
H. Schrop, 222 Ho. Bank Drive
Cincinnati, Ohio, Cincinnati A.C.M., Harry W, Voas, 720 Temple Bar Bldg.
Clarksburg, W. Va,, Central West Va. Credit & Adj.Bureau Inc., U. R. Hoffman
410 Union Natl. Banlc Bldg.
Cleveland, Ohio, Cleveland A. C.M., Hugh Wells, AlO Leader Bldg.
Dallas, Texas — Dallas Wholesale Credit Men's Assn., Paul A.Kerin, 525 Santa Fe
Bldg.
Davenport, Iowa, Tri—City Credit Men's Assn., H.B.Betty- 1001 First Natl. Bank
Bldg.
Dayton, Ohio, Dayton A.C.M., Frank 0. Hax, 303-Eleven 17. Monument Bldg.
Denver, Colo., Rocky Mountain A.C.M., J.B.McKelvy, 810~l4th St. Bldg.
Des Moines, Iowa, Des
Moines Cr.Men's Assn., Don E. Neiman, 1015 Valley Natl.
Bk. Bldg.
Detroit, Mich., Detroit A.C.M., L.E.Phelan, Detroit Savings Banlc Bldg.
Duluth, Minn., Duluth-Superior District Credit Assn., B.G.Robin, 405 Christie Bld$
Elmira, N.I., Elmira Assn. of Credit Men, James E. Fersonius, Robinson Bldg.
El Paso, Texas, Tri—State A.C.M., J.L.Vance, 620 Caples Bldg.
Evansville, Ind., Evansville A. C.M., Victor iihrens, 501 Old National Bank Bldg.
Fargo, N.Dak., Fargo—Iloorhead A.C.M., E. C. Boelter, 602& Center St.,P.O.Box 64
Fort Wayne, Ind., Fort Wayne A,C.M. , Fred K. .White, yiM Transfer Bldg.
Fort Worth, Texas, Fort Worth A.C.M., W.O.Anderson. 215 W.T.Waggoner Bldg.
Grand Forks, N.Dak., Grand Forks A.C.M., Oscar A. Odegaard, % A m o u r & Co.
Fresno, Calif., Fresno Chapter Mgrs. Ass'n. of No. & Central California,
M. F. Troxell - 53? Brix Bldg.
Grand Rapids, Mich., Grand Rapids A.C.M., Edward DeGroot, 602 Assn. of Commerce
Bldg.
Great Falls, Montana, Northern Montana A.C.M., V.L.Nelson, P.O.Box 178-4
Green Bay, Wis., Northern Wisconsin-Michigan A.C.M., R.C.Creviston, P.O.Box 626
Harrisburg, Pa., Harrisburg A.C.M,, Earl V. Glace, % Devine & Yungel Shoe Mfg. Co.
Hartford, Conn., Hartford A.C.M., R.J.Bertina, % New Britain Natl. Bank,
New Britain, Conn.
R-758b
^
- 3 ~
Helena, Mont. - Helena A,O.M., Aubrey M. Holter, 26 West Sixth Avenue
Honolulu, Hawaii, Honolulu A.C.M., H. W. Helbush, 316 S.H.Damon Bldg.
Houston, Texas, Houston A.O.M. Inc., Stuart F. LaChance, 919 M. & M. Bldg.
Huntington, W. Va., Tri—State A.C.M., 0. C. Harrold, 238 First Huntington Natl.
Bk. Bldg.
Indianapolis, Ind., Indianapolis A.O.M., Merritt Fields, Peoples Bank Bldg.
Jackson, Mich., Jackson A.C.M., Lewis 0, Atherton, 127 N. T'isner St.
Jacksonville, Fla., Jacksonville Unit of the N.A.C.M., A.J.Schneider, % Crane Co,
Jamestown, N. X., Jamestoxm A. C.M., Albert K. Langham, P.O.Box 775
}
Johnstown, Pa., Credit Assn. of Western Pa., John R. Vogle, 63.4 Sxrank Bldg.
Kalamazoo, Mich., Credit Aasn. of Southwestern Michigan, Geo. H. Martin,
3-43 N.Rose St.,
Kansas City, Mo., Kansas City A.C.M., L.C.Smith, 316 Carbon & Carbide Bldg.
Knoxville, Term., Knoxville A.C.M., U.A.DeGroat, P.O.Box 2183
Lansing, Mich., Lansing A.C.M., Lawrence Kowalk, % Mill Supplies Corp.
Lewiston, Idaho, Lewiston Wholesale Credit Assn., Franlc Morris, 307 Breier Bldg.
Lexington, Ky., Lexington C.M. A., (Under Louisville) S.J.Schneider, 320 Security
Trust Bldg.
Lincoln, Nebr., Lincoln A.C.M.-W.C.Steffensmeyer, % Sidles Co,
Little Rock, Ark., Little Rock A.O.M., Mrs. L. Periinan, 219 Pyramid Bldg.
Los Angeles, Calif., Los Angeles Credit Men's Assn., S.P.Chase, 111 W. 7th St.
Louisville, Ky., Louisville Credit Men's Assn., S.J.Schneider, 320 TJ. Main St.
Manila, Philippine Islands, Assn. of Credit Men, Inc., (P.I.) J. J. Reynolds,
P.O.Box 882
Memphis, Tenn., Memphis A.C.M., E.C.Correll, 802 McCall Bldg., P.O.Box 344
Milwaukee, Wis., Mi Iwaukee A. C.M., Herman S.Garness, 632 Milwaukee Gas & Light Co.
Bldg.
Minneapolis, Minn., Minneapolis A.C.M., H.S.Holbrook, 420 Rand Tower
Nashville, Tenn., Nashville A.C.M., W.M.Schwalm, 705 Stahlman Bldg.
Newark, N. J,, New Jersey A.C.M., William H. Whitney, 11 Hill St.
P.-768b
^
- 4 Hew Haven, Conn., New Haven A,C.M., Geo. H. Preiss, % Winchester Repeating Arms
New Haven, Conn., Connecticut Assn. C.M., Eugene H. Dietler, 23 Temple St.
*
Hew Orleans, La., New Orleans Credit Merr's Assn., Fred L, Lozes, 1007 Queen &
Crescent Bldg.
Hew York, H.I., Hew York Credit Men's Assn., Win. Walter Orr, 354 Fourth Ave.
Norfolk,
Va., Norfolk-Tidewater A.C.M., B.V.Reynolds, Frank G. Ennis Paper Co.
Oakland, Calif., Wholesalers Credit Assn. of Oakland, Kenneth S.Thomson,
218 Central Bk.Bldg.
Oklahoma City, Okla., Oklahoma Wholesale Credit Men 1 s Assn., M.D.Penberton,
901 Cotton Grain Exchange Bldg.
Omaha, Hebr., Omaha A.C.M,, Sunderland Bldg. G.P.Horn, 15th & Harney Sts.,
Oshkosh, Wisconsin, Central Wisconsin A.C.M., Charles' D.Breon, 311 1st Natl,
Bk.Bldg.
Parkersburg, W.Va., Parkersburg-Marietta A, C.M., R. C.Lantz, % Parleer sburg Iron &
Steel
Peoria, 111, Peoria Assn. of Credit Men, Ernest L.LaBarr, 309 S.Jefferson St.
Philadelphia, Pa., Credit Men's Assn. of Eastern Pennsylvania, J.Stanley Thomas,
8oO Land Title Bldg.
Phoenix, Ariz., Wholesalers C.A. of Arizona, R.V.Willis, 223 Industrial Bldg.
Pittsburgh, Pa., Credit Assn. of Western Penna., H.M.Oliver, Westinghouse Bldg.
Portland, Oregon, Portland A.C.M., E.W.Johnson, 471 Pittock Block
Providence,R. I., Rhode Island A.C.M., Henry T. Farrell, 87 Weybosset St.
Pueblo, Colo., Pueblo A,C.M,, L. H. Myers, 507 Thatcher Bldg.
Richmond, Va., Richmond A.C.M., Harry F.Boswell, P. O.Iox 1178
Roanoke, Va., Roanoke A.C.M., H.W.Hobson, P.O.Box 2045
Rochester, N. Y., Rochester A.C.M., Jack Cogswell, 34 State St.
Sacramento, Calif., Sacramento-Stockton Chapter, Credit Mgrs., Ass'n. of No.& Cent.
Calif., C.J.IIorrissey, 713 Forum Bldg.
Saginaw, Mich,, Northeastern Mich, A.C.M., F.M.Carle, 212 11. Mason St.
St. Joseph, Mo., St, Joseph A,C.M., Frank E. Seay, Dugdale Packing Co.
- 5 -
R-768b
St. Louis, Mo., St. Louis A.C.M., Orville Livingston, 800 Connercial Bldg.
St, Paul, Minn., St. Paul A.C.M., T.E.Reynolds, 801 Guardian Bldg.
Salt Lake City, Utah, Inter-Mountain A.C.M., Robert Peel, 321 Utah Oil Bldg,
San Antonio, Tex., San Antonio Wholesale Credit Men's Assn., James Caldwell
Win. Van Hoogerihuyze Hdv/e. Co,
San Diego, Calif., San Diego TTholesale Credit Men's Assn., Laurence Holzman
508 Commonwealth Bldg.
San Francisco, Calif., Credit Mgr's Assn. of Northern & Central Calif.
O.H.Walker, 333 Montgomery St.
Seattle,Wash., Seattle A.C.H., C.P.King, Marion Bldg.
Shreveport, La.. Shreve-port Wholesale Credit Men's Assn., John A.B.Smith, 214
Ardis Bldg.
Sioux City, Iowa, Interstate A.C.M., P.A.Lucey, 4^6 Davidson Bldg.
Sioux Falls, 8,Dak., Sioux Falls A.C.M., Harold Flater, % Broun Saenger Co.
South Bend, Ind., South Bend A.C.M., E.J.Payton, Al3 Pythian Bldg.
Spokane, Wash., Spokane Merchants Assn., C.O.Bergen, 718 Realty Bldg.
Springfield, 111., Springfield A.C.M», Miss Eda Mueller, Geo.A.Mueller Co.
Springfield, Mass., Western Mass, A.C.M., Allister R.Tullock, 11 Court House PI
Syracuse, II. I., Syracuse A.C.M., Joseph E.Reese, 208 Herald Bldg.
Tacoma, Wash., Tacoma A.C.M., Edtr. B. Lung, P.O.Box 1346
Tampa, Fla., Tampa A.C.Li., P.O.Box 2128
Terre Haute „ Ind., Terre Haute A.C.M., Miss Wanita Gilchrist, Mid Continent
Petroleum, Milks Bldg.
Toledo, Ohio, Toledo A.C.M., Dan W. Cauley, 316 Commerce Guardian Bank Bldg.
Utica, N.I., Utica A. C.Li., Inc., Helen J. Switzer, 2602 Genesee St.
W a co, Texas, Waco A.C.M., Lev W. Mayes, Behrens Drug Co.
Washington, D. C., Washington A.C.M., F.S.Dixon, Boven Bldg. 815-15 St. N, W.
Waterbury, Conn., Waterbury A.C.M., H,G.Pinter, Chase Brass & Copper Co.
R-768b
— 6
w
Waterloo, Iowa, Waterloo A.C.M,, James C. Grahan, 31-4 Insurance Bldg.
Wheeling, W.Va., Wheeling A.C.M., E.K.Ffeil, 206 National Bank of W.Va.Bldg.
Wichita, Kansas, Wichita A.C.M., Inc. M. E. Garrison, 429 First IIatl.Banlc Bldg.
Worcester, Mass., Worcester County A.C.M., Farnsworth Chapin, Graton & Knight Co,
Yotmgstowi, Ohio, p^tigstom, A.C.M,, 0,E,Johnson, 318 Mahoning Bank Bldg,
R-769
BOARD OF G O V E R N O R S
3 3
• F THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 16, 19I4.I
Dear Sir:
This office has been furnished with a
substantial number of copies of a pamphlet "Defense
Contracts Awarded by Federal Reserve Districts and
Industrial Areas June 1 to December $1, 19U0ft,
recently prepared by the Bureau of Research and
Statistics of the National Defense Advisory Commission,
Twenty-five copies of the pamphlet are
being mailed to the field representative at your
head office and ten copies to the field representative at each of your branches, if any.
Very truly yours,
, - < / ) ZN
E. L. Smead, Chief,
Division of Bank Operations.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FIELD REPRESENTATIVES WITH THE PAMPHLETS
(Pamphlets
sent to field representatives only)
R-770
3 4
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For release in morning papers,
Friday, January 17, 194-1
The following summary of general
business and financial conditions
in the United States, based upon
statistics for December and the
first half of January, will appear in the February issue of the
Federal Reserve Bulletin and in
the monthly reviews of the Federal
Reserve Banks.
Industrial activity continued at a high rate in December and
the first half of January and distribution of commodites to consumers
was maintained in large volume.
There was some increase in wholesale
commodity prices.
Production
Volume of industrial production showed little change from
November to December, although usually there is a decline at this season, and consequently the Board's adjusted index rose further by four
points to 136 per cent of the 1935-39 average.
Steel ingot production
was sustained at about 96 per cent of capacity.
New orders for steel
continued large, according to trade reports, and were equal to or slightly greater than productionJ consequently the volume of unfilled orders
remained at about the peak level reached in November.
In the first half
of January steel output increased to around 98 per cent of capacity.
Activity in the machinery, aircraft, and shipbuilding industries continued to increase sharply and working forces were expanded further.
In
these lines and in some others, such as wool textiles, unfilled orders
are exceptionally large, owing in the main to the defense program.
Automobile production declined somevrhat more than seasonally
in December following an unusually large volume of output in November
and October.
Retail sales of new cars during the last quarter of 194-0
were about one-fourth greater than in the corresponding period last year
and used oar sales also were large.
In the nonferrous metals industries
activity increased further in December and output of lumber and cement
showed less thah the usual seasonal decline.
Textile production, which in November had exceeded the previous
record levels reached a year ago, continued at this high rate in December,
not showing the usual seasonal decrease.
At cotton and rayon mills, ac-
tivity increased somewhat farther and at wool textile mills output was
sustained at peak rates.
In tne shoe industry, where output had been in
reduced volume during the first ten months of the year, there was less
than the usual seasonal decline in November and December and, on a seasonally adjusted basis, production was close to earlier peak levels.
At mines bituminous coal production declined less than seasonally and anthracite production increased.
Output of crude petroleum
showed a reduction in December owing mainly to the fact that wells in
Texas were closed for ten days as compared with nine days in November.
Output of metals continued in large volume.
Value of construction contract awards, as reported by the F. W.
Dodge Corporation, increased contraseasonally in December, reflecting
further sharp increases in awards for defense construction and private
-3-
nonresidential building.
R-770
Contracts for private residential building
declined ty somewhat less than the usual seasonal amount.
Distribution
Distribution of commodities to consumers increased more than
seasonally in December.
Department and variety store sales showed the
customary sharp expansion during the Christmas season and sales at mail
order houses rose more than is usual at this time of year.
Freight-car loadings showed a seasonal decline from November
to December.
Shipments of forest products and miscellaneous freight de
creased less than seasonally, while ore loadings, which had been unusually large in November, declined sharply.
Wholesale commodity prices
Basic commodity prices generally increased from the middle of
December to the Kiddle of January, following little change during the
preceding four weeks.
Currently these prices are substantially above
the level prevailing last summer.
Increases in the past month were
most marked for foodstuffs, especially hogs, pork, lard, and cottonseed
oil, but there were advances also in a number of industrial materials,
particularly pig iron, cotton, cotton goods, paint materials, and hides
Steel scrap prices, after increasing during most of the period, subsequently declined and lumber prices also decreased somewhat from the
sharply advanced peak reached in November.
Bank credit
Total loans and investments at reporting member banks in 101
leading cities continued to increase substantially during the six weeks
-4-
R-770
ending January 8, reflecting principally increases in holdings of
United States Government obligations at New York City banks.
Commercial
loans rose somewhat further while loans to New York security brokers
and dealers, which had increased in December, subsequently declined
somewhat.
Excess reserves, after declining during the first half of
December, have since increased to about $6,900,000,0001
The increase
reflected reductions in Treasury deposits with the Reserve Banks, a
continued inflow of gold, and since Christmas a seasonal return flow
of currency from circulation.
United States Government security prices
Prices of United States Government securities reacted somewhat after reaching record high levels early in December.
Bonds of
1960-65 showed on January 3 a net decline of about 2 3/8 points from
the all-time peak of December 10 but subsequently fluctuated somewhat
above this level.
The yield on this issue, which was 2.03 per cent at
the peak in prices, was 2.16 per cent on January 14..
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-771
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 16, 194-1
Dear Sir:
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for the month
of December 194-0.
Please credit the amount payable ty
your Bank to the Board, as shown in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement of
credits through the Inter-district Settlement
Fund for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Bank of Richmond by mail the
amount and purpose of the credit.
Very truly yours,
0. E. Faulk,
Fiscal Agent.
Enclosure
TO PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT RICHMOND
R-771-a
REPORT OF EXPENSES OF MAIM LIMES OF FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF DECEMBER 1940
Federal
Reserve
Bank
Number
of Words
Sent
Boston
New York
Philadelphia
Cleveland
29,633
83,906
23,419
40,348
Richmond
Atlanta
Chicago
St. Louis
44,241
44,055
66,909
43,427
Minneapolis
Kansas City
Dallas
San Francisco
19,423
40,601
37,084
54,010
Board of
Governors
372,894
Total
899,950
Words Sent
by N. Y.
Chargeable
to Other
F.R. Banks
692
-
695
696
692
691
737
Total
Words
Chargeable
30,325
83,906
24,114
41,044
S
688.82
340.17
868.68
240.53
286.61
330.96
241.41
1,273.98
230.94
508.93
1,408.15
404.69
$
692
44,119
754.09
750.95
1,135.26
740.42
692
20,115
41,293
37,861
54,705
337-58
693-00
635.40
918.08
190.69
273.01
272.78
430.32
372,894
6,258.07
10,253.36
907,701
115,233.44
$15,233.44
692
777
695
7,751
44,933
44,746
67,646
Payable
to
Board
of Governors
Expenses
Paid
by Banks
and
Board (2)
Pro Rata
Share of
Total Expenses (l)
$
168.76
539-47
164.16
402.21
423.13
509.54
138.72(a}
509.48
146.89
419.99
362.62
487-76
$4,134.01
138. 72(a)
$3,995.29
(1)
Based on cost per word (4.016782443) for business handled during the month.
(2)
Payments by Banks are for personal services and supplies and payments by Board
are for personal services and supplies ($1,157.98) and wire rental ($9,563.10)
less amount ($467.72) representing reimbursement for the cost of sending messages between the Washington office of the Leased Wire System and the local
telegraph offices of the Treasury, Reconstruction Finance Corporation, and the
Commodity Credit Corporation, personal services include salaries of main line
operators and of clerical help engaged in work on main line business, such as
counting the number of words in messages; also overtime and supper money and
Retirement System contributions at the current service rate.
(a)
Credit—reimbursable to Chicago.
R-772
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For release in afternoon newspapers
of Friday, January 17, 194-1
January 16, 1941
The Board of Governors of the Federal Reserve System hag
adopted the attached amendment to Regulation U, Loans ty Banks for
the Purpose of Purchasing or Carrying Stocks Registered on a National
Securities Exchange.
The amendment, which becomes effective February 17, 194-1,
is essentially technical.
Its principal purpose is to reconcile pro-
visions of Regulation U with rules recently issued ty the Securities
and Exchange Commission with respect to the hypothecation by brokers
or dealers of securities carried ty them for the account of customers
(Rule X-8C-1 and Rule X-15C2-1), which become effective on February 17,
1941.
These SEC rules, in order to safeguard the rights of customers in their securities, provide among other things that when a broker
or dealer borrows on any customers' securities he must not commingle
them with his own under the same pledge.
The amendment to Regulation
U takes account of this requirement by providing, in effect, that any
indebtedness of a broker or dealer that is secured by customers' securities shall be treated separately from any of his other indebtedness.
41
-2-
R-772
There are provisions, however, both in the SEC rules and in Regulation U, which permit an agreement between the borrower and the lender
ty which securities belonging to the broker or dealer himself may be
used as supplementary collateral for a loan secured by securities of
his customers.
In addition to making changes necessitated by the SEC rules,
the amendment to Regulation U provides for a simple mechanism by which
collateral that is used to meet the requirements of Regulation U may
be earmarked and distinguished from other collateral which, even though
it secures a loan subject to the regulation, is not used for the purpose of meeting those requirements.
This will simplify operations
under the regulation, especially in cases involving loans to a broker
and dealer in securities who has at the bank both a loan that is subject to the Board's margin requirements and a loan that is not subject
to these requirements.
In connection with this mechanism, collateral
which must be used to meet the Board's margin requirements for certain
loans to brokers and dealers may be used for other purposes only to a
limited extent.
In particular, it may not be used to enable the bor-
rower to obtain on the basis of the same collateral both a loan subject
to the Board's margin requirements and a loan not subject thereto.
This
restriction, however, does not apply to the use of collateral for purposes of maintaining both loans, provided both loans have been properly
made in the first place.
One effect of the amendment will be to enable banks which
must revise any of their loan agreements with brokers or dealers as
a consequence of the SEC rules to do so with a minimum of inconvenience.
The amendment does not require any bank to reduce any loan,
to obtain additional collateral for any loan, or to call any outstanding loan because of insufficient collateral.
R-772-a
Amendment No.' L of Regulation U - Effective February 17, 1961.
Regulation U and the Supplement thereto are hereby amended
in the following respects, and such amendment shall become effective
February 17, 1941, but any bank may, at its option, conduct its operations in accordance with such amendment at any time prior to that
date:
1. Section 3 of Regulation U is amended ty adding the following subsections at the end thereof:
On) Indebtedness "subject to section 1" is indebtedness
which is secured directly or indirectly tiy any stock, is for the purpose of purchasing or carrying any stock registered on a national securities exchange, and is not excepted ty section 2.
(n) In the case of any loan subject to section 1 to a broker
or dealer in securities, and in the case of any such loan to any other
borrower whose indebtedness the bank elects to treat for the purposes
of this subsection as if it were that of a broker or dealer, the bank
shall identify all the collateral used to meet the collateral requirements of section 1 and shall not cancel the identification of any part
thereof except in circumstances that would permit the withdrawal of
that part. Such identification may be made try any reasonable method.
In any such case —
(1) Only the collateral so identified shall have
loan value for purposes of section 1 or be subject to
the restrictions therein Specified with respect to
withdrawals and substitutions; and
(2) For any indebtedness of the same borrower
that is not subject to section 1 (other than a loan
described in section 2(d), (f), (g), or (h)), the
bank shall in good faith require as much collateral
not so identified as the bank would require (if any)
if it held neither the indebtedness subject to section 1 nor the identified collateral. This rule
shall not be construed, however, to require the bank,
after it has made any loan, to obtain any collateral
44
-2-
R-772-a
therefor because of any decline in the value or
quality of the collateral or in the credit rating
of the borrower.
(o) This subsection applies to any case in which indebtedness
of a broker or dealer that is subject to section 1 is secured ty any securities which, according to written notice received try* the bank from
the broker or dealer pursuant to a rule of the Securities and Exchange
Commission concerning the hypothecation of customers' securities (Rule
X-8C-1 or Rule X-15C2-1), are securities carried for the account of one
or more customers. For the purposes of this regulation —
(1) All such securities and all such indebtedness
shall be considered separately from other collateral
and indebtedness of the borrower;
(2) Only such securities shall have loan value
for any such indebtedness; and
(3) All such indebtedness shall be considered a
single loan and all such securities shall be considered in connection therewith, except that specified
indebtedness, together with the securities treated by
the bank as having loan value therefor, may be treated
separately if such securities secure only such specified indebtedness and the borrov/er states in writing
that they are carried for the account of a single
customer.
2. The second paragraph of the Supplement to Regulation U is amended
to read as follows:
Loans to brokers and dealers. - Notwithstanding the foregoing,
a stock, if registered on a national securities exchange, shall have a
special maximum loan value of 75 per cent of its current market value,
as determined by any reasonable method, in the case of a loan to a
broker or dealer from whom the bank (1) accepts in good faith a signed
statement to the effect that he is subject to the provisions of Regulation T (or that he does not extend or maintain credit to or for customers except in accordance therewith as if he were subject thereto),
and (2) receives written notice, pursuant to a rule of the Securities
and Exchange Commission concerning the hypothecation of customers' securities by brokers or dealers (Rule X-8C-1 or Rule X-15C2-1), to the
effect that the stock is a security carried for the account of a customer .
45
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-773
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 21, 1941
Dear Sir:
The Board of Governors of the Federal Reserve System is
advised that on Wednesday, February 12, a majority of the Federal
Reserve Banks and branches will be closed in observance of the anniversary of the birth of Abraham Lincoln, and accordingly there will
be neither transit nor Federal Reserve note clearing through the
Interdistrict Settlement Fund on that day. For your information,
the Board is advised that the following Federal Reserve Banks and
branches will be open for business on February 12:
Boston
Richmond
Baltimore
Charlotte
Atlanta
Birmingham
Jacksonville
New Orleans
St. Louis
Little Rock
Kansas City
Oklahoma City
On Saturday, February 22, in observance of Washington's
Birthday, the offices of the Board and all Federal Reserve Banks
and branches will be closed.
The Board is also advised that the New Orleans Branch of
the Federal Reserve Bank of Atlanta will be closed on Tuesday,
February 25, 1941 in observance of Mardi Gras Day. Please include
transit clearing credits of February 25 for the New Orleans Branch
with your credits for the following day.
Please notify branches.
Very truly yours
F. A. Nelson,
Assistant Secretary
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
46
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-77U
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 22, 19i{l
Dear Sir:
As a result of conferences between representatives
of the Reconstruction Finance Corporation and certain surety
companies, the enclosed copy of agreement, which it is contemplated will be used in ordinary circumstances in financing
supplies contracts, has been worked out in order to define
the respective rights of the Reconstruction Finance Corporation when it finances such a contract and the surety company
on a performance and/or payment bond written in connection
with such contract. The copy of this agreement has been furnished us through the courtesy of representatives of the Reconstruction Finance Corporation and it is understood has
been furnished to the local agencies of the Reconstruction
Finance Corporation for their information# The enclosed copy
is for your information and such use as you may wish to make
of it* A copy of a bulletin on this subject issued by the
Association of Casualty and Surety Executives to its member companies is also enclosed,
A copy of this letter, with enclosures, has be on sent
to the Field Representative at your head office and each of your
branches, if any.
Very truly yours,
E# L, Smcad, Chief,
Division of Bank Operations.
Enclosures
TO TH7' PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FIELD REPRESENTATIVES
(Enclosure to Presidents and Fie Id Representatives only)
47
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-775
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
>I>f k.^ . .WJ v( IlV
January 23, 194-1
Dear Sir:
There are enclosed for your information a table showing applications for membership received by the Board during 194-0,
and a statement containing excerpts from the
bank relations reports submitted by the Federal Reserve Banks for the month of December.
Very truly yours,
L. P. Bethea,
Assistant Secretary
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-775-a
BANKS ELIGIBLE* FOR FEDERAL RESERVE MEMBERSHIP ON DECEMBER 31.
1939. AND BANKS WHICH APPLIED FOR MEMBERSHIP DURING 1960
Federal
Reserve
District
Number of Nonmember Commercial Banks Eligible* for
Federal Reserve Membership
on December 31. 1939
Total
i On Par List
Number of Banks
Which Applied for
Federal. Reserve
Membership During—
December This Year
Boston
New York
Philadelphia
Cleveland
141
224
225
. 475
141
224
225
474
0
6
0
0
0
17**
5
23
Richmond
Atlanta
Chicago
St. Louie
394
484
1,219
664
232
52
1,079
434
1
1
4
3
420
487
282
194
78
402
174
182
5,209
3,697
Minneapolis
Kansas City
Dallas
San Francisco
Total
Deposits of Nonmember
Deposits of Banks
Commercial Banks Eligible* Which Applied for
for Federal Reserve Member- Federal Reserve
. ship' on December 31. 1939 Membership During—
On Par List
December IThis Year
Total
(In thousands of dollars)
469,330
981,529
550,836
577,670
469,330
981,529
550,836
577,367
0
7,100
0
0
O
23,900
5,000
35,900
18
3
66
21
481,555
302,655
1,114,286
428,385
396,447
70,987
1,054,464
309,111
200
700
8,700
2,700
21,600
3,500
32,900
12,700
0
2
3
1
7
10
26
5
189,225
198,993
154,549
545,398
53,439
178,372
110,025
541,768
0
1,100
10,000
300
8,700
14,400
23,300
5,700
21
201
5,994,411
5,293,675
30,800
237,600
*By eligible banks is meant banks with sufficient capital stock to meet the minimum statutory capital requirements
for Federal Reserve membership
^Includes one newly organised bank for which no deposits are shown.
R-775-b
January 23, 1941
Not for Publication
EXCERPTS FROM BANK RELATIONS REPORTS
FOR THE MONTH OF DECEMBER I960
BOSTON
During December, 25 banks were visited of which 16 were member and 9 nonmember banks, all located in Connecticut.
All member banks reported loans and deposits to be on the
increase and several called attention to their earnings for the year,
which in every case were above the earnings for 1939. A good part of
the increases was from security sales, personal loans, service charges,
and income from trust departments. Lending rates continued unchanged.
Service charges had been revised upward ty some banks and others are
contemplating similar revisions. Interest rates on savings deposits
had been lowered ty some banks during 194-0 without loss in volume of
deposits. Investment accounts showed little recent activity—there
had been some buying of small amounts of Governments and municipals.
The improved demand for rental properties in some communities had had
the effect of reducing arrearages of taxes, overdue interest, etc.,
on mortgages held ty some banks.
Federal Reserve activities in connection with the national
defense program were discussed at all banks visited. It was found
that a few loans had been made ty member banks in conjunction with
the Reconstruction Finance Corporation. In most instances the loan
originated with the Corporation and the bank had been invited to participate . Where plant expansion was found to be in progress or contemplated, it was expansion being undertaken ty large concerns and
financed ty them out of their own resources.
Inquiries from nonmember banks with respect to Federal Reserve Bank functions and operations were more frequent than usual.
Only in one instance did such inquiries lead to a general discussion
of membership. In this case the bank is a former member which withdrew from the System upon finding that a certain condition of membership hampered its operations as a State member bank. It is probable
that this bank will come in later on as a national bank.
NEW YORK
During the month of December, our officers and representatives visited 38 banks, of which 25 were member and 13 nonmember
institutions.
Our bank relations activities consisted in part of making
follow-up visits to nonmember banks in which the managements have
shown a keen interest in membership, and one of our officers accompanied by a special representative visited five Long Island banks
which have recently joined the Federal Reserve System. Four applications for membership were received during the month and several
other nonmember bankers have indicated that their boards of directors may take favorable action in the near future.
A number of bank officers brought up the subject of national defense loans and indicated an eagerness to advance funds against
assignments of Government contracts. Several of them commented favorably on the information contained in our circular "Financing the National Defense Program", and said that whenever possible they will
encourage local industries to participate in this program.
PHILADELPHIA
During the month of December, 83 banks were visited of which
27 were member and 56 nonmember institutions.
The five counties covered by this report (north central
Pennsylvania) comprise 3,975 square miles with a population of 188,800.
The total banking resources of $83,169,000 are distributed among 26
member banks, which hold $55,121,000, and 14 nonmembers, which hold
$28,048,000.
Industrial operations in these counties have improved greatly since last year and pay rolls are well in advance of recent years.
Indications point to even greater increases in activity.
Banking conditions have improved slightly since last year.
Many bankers report a better demand for credit, although it is almost
entirely for small loans. Several institutions have been actively
participating in the FHA program by granting credit of that type,
while others have purchased guaranteed mortgages to bolster earnings.
Results have been generally satisfactory. Loan liquidation was reported to have improved as a result of increased pay rolls.
Investment accounts continue to present problems.to many
banks, although improvement can be noted since last year. Holdings
of railroad bonds are not so heavy as in past years, but it is in
such issues that much of the existing depreciation rests. The larger
banks have been increasing their Government holdings through purchases
in the market, but the small institutions have acquired most of their
additional Governments through subscriptions to new issues.
-3-
R-775-b
The Interest of nonmember banks in membership in the System
continued in evidence during December, when the managements of A3
banks were interviewed on the subject. One request for examination
was received and the managements of several other institutions stated
that they were very desirous of affiliating with the System, and would
be prepared to give the matter serious consideration after the first
of the year.
CLEVELAND
During the month of December 113 banks were visited, of
which 74 were member banks and 39 nonmember banks. One State bank
having resources of $2,44-0,000 was admitted to membership in the
System.
In a recent report to the Board it was stated that of five
principal downtown banks in a fair-sized industrial city three had
reduced the interest rate on time and savings accounts from 2 to 1
per cent, one bank had maintained the rate at 2 per cent, and the
other had increased from 2 to 2-1/2 per cent. The above changes were
made effective July 1, 1940.
A comparison of the published statements of these five banks
between that date and the year end shows that all of the banks, with
the exception of the one raising the rate, have lost deposits; the net
loss was approximately 7-1/2 per cent of total time and savings accounts. The one bank increasing the rate showed a net gain for the
period of about 18 per cent.
In a relatively small industrial city on the Ohio River a
banker "cannot understand why bankers generally are complaining about
earnings". He seemed proud to point out that his own earnings have
been consistently good throughout the depression period, net for 1940
being estimated at 22 per cent of capital, which compares with 20 per
cent last year.
RICHMOND
During the month of December 71 banks were visited, of which
59 were member and 12 nonmember institutions.
At the close of 1940 the economic position of the Fifth
Federal Reserve District was much stronger than was indicated at the
beginning of the year. This was because the national defense expenditures and defense contracts awarded were greatly augmented later in
the year and superimposed on a level of business already strong.
R-775-b
Construction contract awards in the District, which include
those for defense, amounted to $419 millions in eleven months of 1940
against $355 millions in a like period of 1939.
The agricultural situation looked like the weak spot at the
beginning of 194-0, but a marked improvement in the cotton crop and
larger mixed farming returns more than offset a decline in the Income
from tobacco. Tobacco returns were about 30 per cent smaller than
last year, but many flue-cured farmers got net returns that were
satisfactory.
For ten months of 1940 the cash farm income of the Fifth
Federal Reserve District totaled #458 millions, which was #23 millions
higher than in those months of 1939. The tobacco situation is still
not promising, though crop control should improve prices still further.
The Fifth District's textile industry—with prices held in
reasonable bounds—hung up a new record last year, and is heading toward another in 1941- More and more mills have added a third shift.
Here and there plants that had been idle for months have opened for
business. Cotton mills in the Carolinas suspended only two days for
Christmas instead of the entire week as is customary. Many mills report orders on hand enough to run at three-shift capacity for three
months.
ATLANTA
During December 30 banks were visited, of which 12 were member banks and 18 nonmember banks.
The territory covered in Alabama is primarily agricultural,
cotton being the principal money crop. Throughout the section visited
in Alabama, the cotton crop was for the third consecutive year almost
a complete failure. In some communities it was reported that the
yield was only about 15 per cent of a normal crop.
Many of the banks in this area are experiencing slow collections, and some will sustain losses, especially in those counties depending solely on cotton. In many counties cotton acreage has been
reduced and farm income is being supplemented from other sources such
as lumber, beef cattle, and dairying. In these counties general business conditions were found to be much better than in the purely cotton
counties, primarily as a result of the recent increased activity in
the lumber business.
Production in most of the heavy capital goods industries in
the Birmingham district is now at the highest level in local history.
-5-
R-775-b
Open hearth furnaces and blast furnaces are operating at approximately
100 per cent and, except for curtailments due to relinings and other
essential replacements, there is every indication that these two basic
operations of the district will continue for some time at the same
operating rate. Major plant expansions are being accelerated in anticipation of increased production in many lines, notwithstanding the
current high rate of operation.
Deposits in local banks are the largest in history. Loans
have consistently increased in recent months but there is nothing like
a normal proportion of loans to deposits. Local banks are diligently
seeking loans through media of advertising, personal solicitation, etc.
It is anticipated that further developments in the national defense
program may increase the demand for good loans in many channels of industry and business. Real estate values remain relatively low and
mortgages based on present valuations generally are conceded to be
on a sound basis.
CHICAGO
During the month of December, calls were made on 38 member
and 18 nonmember banks. Twelve State banks were admitted to the System, bringing the total number of admissions for the year 1940 to 64.
Membership as of December 31 consisted of 543 national banks and 320
State banks, a total of 863. One member State bank has advised us
that it will withdraw from the System in order to open a branch office.
Reports indicate that
year, and while the loan demand
there has been some increase in
June. Banks interviewed do not
ings of Government bonds.
banks have had a uniformly profitable
has shown no important change in trend,
the loan portfolios of the banks since
seem to be disturbed over their hold-
The recent Special Report to the Congress has received much
favorable comment in this district, both from bankers and from industrial leaders, not only for its content but also for its timeliness,
and the hope was expressed that it will become law.
Commercial activity has speeded up, and reports from the conventions being held in Chicago show an optimistic attitude on the part
of manufacturers for 1941 business. Most of the conventions have the
largest attendance in history. Employment continued to increase, as
has building construction. Prices for farm commodities, with the exception of dairy products, have held up fairly well. The most interesting change recently from the farmers' standpoint has been the
improvement in the hog market. However, it is felt that farm products
as a whole are still out of line with those of industry.
-6-
R-775-b
ST. LOUIS
During the month of December 178 banks were visited, of which
62 are members and 116 nonmembers.
Taken as a whole the status of Illinois banks was moderately
improved over a year earlier. Demand for funds has broadened to some
extent, though there is still a large volume of money in many institutions seeking investment. Several bankers related that during the past
several years most of their net profits have gone toward eliminating
criticized assets. Comment of a number of bankers was to the effect
that they believed the 3/4 per cent interest on defense bonds is much
too low.
According to a report received from our Louisville Branch,
a majority of the banks in Louisville report that they have received
numerous inquiries regarding loans and have arranged lines of credit,
but a very small amount of the credit available has been used. In
fact, one banker stated his bank was seriously considering charging a
commitment fee for credit lines established but not used. On the other
hand, an officer of a large member bank stated that his bank had increased its loans $6,000,000 since June 1940. Half of this increase
consisted of loans made at low rates of interest to preferred lines.
A considerable pick-up in the velocity of loans at this bank is also
reported, $23,000,000 having been made in a relatively short period
with many liquidations in evidence. Another member bank has adopted
the policy of liquidating its commercial bond account, using the funds
from this source to make consumer credit loans which have proved to be
profitable and satisfactory. An effort will be made to increase the
volume of this type of loan until it equals the total savings deposits
on the bank's books.
In December, the First Bank of Charlestown, Indiana; the Bank
of Maxvllle, Arnold, Missouri; the First Bank and Trust Company, Cairo,
Illinois, and the First State Bank of Olmsted, Illinois, became members
of the Federal Reserve System. The addition of these banks brings the
total membership of the Federal Reserve Bank of St. Louis to 415. During the year 1940, 21 State banks end trust companies in this district
joined the System. This equals the number admitted in 1933, and is
more than in any other year since 1920.
MINNEAPOLIS
During December 69 banks were visited, of which 26 were member and 43 nonmember institutions.
An officer who visited banks in North Dakota said that almost
without exception the banks reported increased earnings in 1940 and
-7-
R-775-b
that they will pay substantial dividends. We do not have a single
State member bank in North Dakota. Exchange and capital requirements
are the two obstacles. One national banker said that he did not know
how long the stockholders of his bank would permit him to keep his
bank in the national system since the loss of exchange was substantial.
We have sent out 1,237 newspaper releases since we started
this work in September; 113 of which have been released so recently,
we have had no returns. The only check we have is on Minnesota; our
clipping bureau does not extend into the other States. Of the localized stories, 39 per cent have been published and we have received the
clippings from the Minnesota Editorial Association. Of the defense
stories to publishers in Minnesota, we have received clippings from
only 9 per cent. These figures are minimum figures, since there may
be publications which the clipping bureau overlooks. We conclude,
therefore, that the 39 per cent of clipping indicate our efforts to
publicize localized stories are well worth while. With 9 per cent
published, stories on defense apparently are not so well received,
probably largely because they do not apply to local situations.
During the month, 14-6 manufacturers were interviewed at the
bank fcy our industrial coordination department and 3 at their plants.
In addition, information regarding the operations of this department
was forwarded to all banks in the district, to 226 chambers of commerce, and to 50 manufacturers. Inquiry letters totaling 301 were received from banks, manufacturers, and general public, and telephone
inquiries from the same sources totaled 126. Talks to luncheon clubs
and other groups on financing and facilitating the defense program
numbered four, with an aggregate attendance of 194-•
Two meetings of manufacturers, city officials, and service
organization representatives were attended for the purpose of aiding
them in their attempts to form some sort of production pool for obtaining Government contracts.
KANSAS CI1Y
During the month of December 82 banks were visited, of which
26 were member and.56 were nonmember banks.
As regards local conditions, bankers are in good spirits.
Bank earnings the past year were as a rule good and the crop outlook
for next year is promising. In the so-called Dust Bowl of Kansas and
the Oklahoma Panhandle it was said that the moisture received in
November was the largest for that month in many years. In fact, in
some places only about 40 per cent of the wheat had been drilled by
December largely on account of wet ground, November and December
-6-
R-775-b
were unusually wet nearly everywhere in the District and the subsoil
is getting a large amount of winter moisture for the first tine in
years.
No longer is there heard any talk of lack of confidence and
some bankers mentioned the apparent return of confidence. It was sometimes pointed out that the little faith in deficit spending of recent
years defeated that program as a recovery measure and consequently made
impossible the inflation that was feared. Now, it was observed, with
a better state of mind, an expansion of business activity and credit
may easily produce the inflation that the public had come to believe
was a false alarm.
In some of the small towns it is reported that these places
are already beginning to suffer on account of the young men going to
larger places for employment. Occasionally a bank is found that says
it is having no difficulty operating under the 40-hour week tut such
cases are very much the exception. A good many bankers were found who
seemed interested in discussing Government financing and taxable Government securities. In Kansas one of the greatest obstacles to membership still remains the opposition to deposit insurance.
There is still some complaint of shortage of demand for loans
but this complaint is heard much less frequently than a year ago. Some
city bankers who specialize in country bank accounts report that there
has been generally a marked increase in loans of country banks and that
the cash position of aany of these country institutions is the smallest
it has been for some time. There is great variation among banks, however, in this respect. In some institutions loans are scarcely a quarter of deposits while in other cases they are a half or two-thirds. It
is said that there is quite a little borrowing by country banks from
their correspondents and that others are getting close to the borrowing
point.
DALLAS
On account of interruptions due to various uncontrollable
causes our regular bank visitation activities were suspended during
December 1940, and no visits were made during the month.
SAN FRANCISCO
During the month of December 52 banks were visited, of which
35 were member and 17 nonrnembar institutions.
In Los Angeles the rate of building and construction continued relatively high in 1940, although the cumulative total of permits
-9-
R-775-b
of 68 million dollars for the first 11 months was one per cent below
the like period a year ago. Until the end of October the total was
about the same this year, but November permits were off 18 per cent
from last year's month. Seasonal influences are held to be responsible for a portion of this decline.
The motion picture industry, which was adversely affected by
the European war, is currently regaining both volume and earning power.
This reflects adjustments incidental to loss of foreign outlets, expanding domestic box office receipts, and the effect of increased sales
promotion in South American markets.
Agriculture in Los Angeles County, although not participating
directly in the defense industry boom, experienced some improvement in
the returns from its products this year. Higher prices, large production, and record Government subsidy payments have contributed to the
improved showing.
Citrus growers had the market to themselves for a large part
of the summer months because of crop curtailment in Florida as a result
of subnormal temperatures last winter. The California summer orange
crop, however, was the second largest in history and returns, which
averaged ten cents per packed box above last year, did not compensate
many growers for the cost of production*
Cattle operators generally have experienced a satisfactory
year. Ranges and pastures have been above normal, the cost of supplemental feed has been comparatively low, and prices of both feeder and
finished livestock have been relatively high. Feeders of cattle have
expanded operations in anticipation of a strong demand for beef as a
result of industrial activity. The number of cattle now in feed lots
is the largest in several years.
The airplane industzy further expanded during the year to
provide facilities to handle the enormous volume of orders from the
United States and British Governments. New manufacturing space is not
yet equal to the volume of new business in consequence of which backlogs are much higher than a year ago. This expansion of output has
resulted in a material increase in new employment, with the present
personnel understood to be about double last year. This doubtless comprises a substantial portion of the 24 per cent increase in industrial
employment and 30 per cent increase in industrial pay rolls, which were
reported for October.
58
-id-
R-775-b
PUBLIC RELATIONS ACTIVITIES OF FEDERAL RESERVE BANKS
December 194-0
Federal
Reserve
Bank
Meetings Attended
Visits to Banks
Number fAttendance
Addresses Made
Number
Attendance
Member
Nonmember
Total
Boston
New York
Philadelphia
Cleveland
16
25
83
74
9
13
. 27
39
25
38
56
113
6
9
8
6
2,918
784
1,510
1
2
8
5
50
400
784
264
Richmond
Atlanta
Chicago
St. Louis
59
12
18
62
12
18
33
116
71
30
56
178
10
8
9
5
1,583
930
5,360
345
0
0
3
3
0
0
230
140
Minneapolis
Kansas CityDallas
San Francisco
26
26
0
35
43
56
0
17
69
82
0
52
5
9
5
13
600
4,313
560
2,095
8
2
1
7
440
275
30
725
1/
Not reported
y
•
•
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-776
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 24, 194-1
Dear Sir:
In accordance with the customary procedure , there is transmitted herewith, for your
information, a copy of the certificate of the
auditor of the Federal Reserve Bank of Atlanta
in connection with his audit of the accounts
and records of the Board's Fiscal Agent for the
period July 1 to December 31, 194-0, inclusive.
Very,truly vours.
L. P. Bethea,
Assistant Secretary
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
6 0
R-776-a
I, S. P. Paris, hereby certify:
(a)
That a complete audit has been made of all entries
in the account - "Board of Governors of the Federal
Reserve System - General Fund Account" for the period
July 1, to December 31, 1940, inclusive.
(b)
That all cash received ty the Board as shown ty the
Cash Receipts Book has been deposited ty the Fiscal
Agent and properly credited ty the Federal Reserve
Bank of Richmond.
(c)
That all remittances made direct to the Federal Reserve Bank of Richmond ty the Federal Reserve Banks,
in compliance with the Board's instructions, have
been properly placed to the credit of "Board of
Governors of the Federal Reserve System - General
Fund Account"'.
(d)
That each expenditure made ty the Fiscal Agent was
properly authorized ty an administrative officer of
the Board.
(e)
That the items of receipts and expenditures shown by
the books of the Fiscal Agent have been reconciled
with the items shown in the statements of the Board's
account prepared ty the Federal Reserve Bank of
Richmond.
(f)
That the balance as shown ty the books of the Fiscal
Agent has been reconciled with the balance standing
to the credit of the Board of Governors of the Federal
Reserve System on the books of the Federal Reserve
Bank of Richmond as certified to ty the Auditor of
that bank.
Respectfully submitted,
(Signed)
E. P. Paris
E. P. Paris,
Auditor,
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
R-777
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
January 25, 19U1
Dear Sir:
With my letter of December 27, 19^0, I
forwarded to you a copy of the first report to the
Board on the activities of the Federal Reserve System
in connection with the defense program and advised you
that future reports would be made at approximately
monthly intervals. My second report, dated January
21, 19!l1, has now been submitted to the Board and I am
pleased to enclose a copy for your information.
A copy of this letter, with enclosure, has
been sent to the Field Representatives at your Head
Office and each of your Branches, if any.
Very truly yours,
iba&fr"
Ernest G. draper
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RBSHtVB BANKS
COPY TO FIELD REPRESENTATIVES
(Enclosure to Presidents and field representatives only)
62
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-778
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
January 28,191+1
Dear Sir
There are enclosed for your information and
the information of the field representative at your Bank,
one copy of each of the following bulletins relating to
the farming out of contracts, issued by the National
Defense Commission;
Special Areas Bulletin No, 1
Far Information of Government Purchasing
Agents, Contractors and Sub-contractors
Special Areas Bulletin No. 2
For Information of Government Purchasing
Agents, Contractors and Sub-Contractors
Farming Out Bulletin No. 3
For Information of Local Defense Production
Groups Who are in a Position to Negotiate
with Prime Contractors
Additional copies of these bulletins are not now
available.
Very truly yours,
Enclosures 3
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Enclosures with addressed copies only)
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-779
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
January 31* 19^1
Dear Sir:
On January 10,
we forwarded five
copies of the report "Defense Contracts Awarded by
War and Navy Departments between June 1 and November
30, 19^0, Listed by Federal Reserve District" to the
field representative at your head office and two
copies to each of your branches, if any.
We are today forwarding the same number of
copies of a Supplementary List showing the Major Defense
Contracts Awarded during the Month of December 19L.0,
We have on hand a few copies of both these
reports and if you wish additional copies we will be
glad to forward you a limited number if you will advise
us as to the number you desire.
Very truly yours,
Ernest G. Draper
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Copy to field representatives)
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
R-780
WASHINGTON
w/mj
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
February 7> 19Ul
Dear Sir;
Referring to the Board's letter R-7&5
January
11, 19W-, the following change took place during January
in the list of nonmeiriber banks that have in force agreements with the Board pursuant to the provisions of
Section 8(a) of the Securities Exchange Act of 193U:
Deletion
Connecticut
Bridgeport
The West Side Bank
(Admitted to Federal Reserve membership
on January 15, 19W-)
Very truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
R-781
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STAfEMENT FOR THE PRESS
For Immediate release
February 13, 1941
At the request of certain brokers and dealers in securities, the Securities and Exchange Commission has postponed the effective date of its Rule X-8C-1 and Rule X-15C2-1 relating to the
hypothecation of customers' securities so that these rules will
become effective on February 24, 1 9 # instead of the original effective date February 17, 1941.
Due to the relation between these
rules and Amendment No. 4 of the Board's Regulation U which was to
become effective on February 17, 1941, the Board has adopted the
following resolution postponing the effective date of that amendment until February 24, 1941:
"The effective date of Amendment No. 4 of Regulation U which was to have become effective February 17,
1941 is hereby postponed until February 24, 1941, but
any bank may, at its option, conduct its operations in
accordance with such amendment at any time prior to
that date as permitted under the original amendment."
*******
66
BOARD OF G O V E R N O R S
R-782
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
uBPi;
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
February lit, 19U1
Dear Sir s
There is enclosed for your information
a copy of a pamphlet "The Problems and Organization of Fanning Out"# issued by the Labor Division
of the National Defense Advisory Commission.
Ten copies of this pamphlet are being
forwarded to the field representative at your
head office and three copies to the field representative at each of your branches, if any.
Very truly yours,
*
Ernest G, Draper
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Copy to field representatives)
BOARD OF G O V E R N O R S
67
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
niiiiiipiii
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
R-783
February 14, 194-1
Dear Sir:
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for the month
of January 1941.
Please credit the amount payable try
your Bank to the Board, as shown in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement of
credits through the Interdistrict Settlement
Fund for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Bank of Richmond ty mail the
amount and purpose of the credit.
Very truly yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT RICHMOND
68
R-783-a
REPORT OF EXPENSES OF MAIN LINES OF FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF JANUARY 1941
Federal
Reserve
Bank
Number
of Words
Sent
Boston
New York
Philadelphia
Cleveland
26,836
79,769
19,689
35,651
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Words Sent
ty N. Y.
Chargeable
to Other
F.R. Banks
$
462.20
1,354.00
340.96
611.88
$
279.37
876.19
239.45
249.69
398
397
27,230
79,769
20,087
36,048
42,737
43,189
69,398
43,689
397
396
445
396
43,134
43,585
69,843
44,085
732.16
739.81
1,185.52
748.30
335.21
241.76
1,275.35
247.17
21,507
41,073
37,818
55,350
396
396
425
398
21,903
41,469
38,243
55,748
371.78
703.89
649.14
946.27
185.06
273.01
324.68
425.76
358,445
6,084.25
9,977.46
879,589
$14,930.16
$14,930,16
Board of
Governors
358,445
Total
875,151
394
-
.
—
4,438
Payable
to
Board
of Governors
Expenses
Paid
ty Banks
and
Board (2)
Pro Rata
Share of
Total Expenses (3)
Total
Words
Chargeable
$
182.83
477.81
101.51
362.19
396.95
498.05 >
89.83(a)
501.13
186.72
430.88
324.46
520.51
$3,983.04
89.83(a)
$3,893.21 .
(1)
Based on cost per word ($.0169^4019) for business handled during the month.
(2)
Payments ty Banks are for personal services and supplies and payments ty Board
are for personal services and supplies ($1,157.98) and wire rental ($9,255*00)
less amount ($435.52) representing reimbursement for the cost of sending messages between the Washington office of the Leased Wire System and the local
telegraph offices of the Treasury, Reconstruction Finance Corporation, and
\
the Commodity Credit Corporation. Personal services include salaries of main
line operators and of clerical help engaged in work on main line business,
such as counting the number of words in messagesj also overtime and supper
money and Retirement System contributions at the current service rate.
(a)
Credit—reimbursable to Chicago.
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-784
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
********
February 15, 1941
Dear Sir:
There Is enclosed for your information a copy
of a ruling by the Comptroller General of the United
States to the effect that in appropriate circumstances
a partnership may be considered "an institution" to which
claims may be assigned under the Assignment of Claims Act
of 1940.
A copy of this letter, with enclosure,•has been
sent to the Field Representative at your head office and
each of your branches, if any.
Very truly yougs,
yo
Ernest G. Dn/per
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE RANKS
COPY TO FIELD REPRESENTATIVES
(Enclosure to Presidents and Field Representatives only)
BOARD OF G O V E R N O R S
v o
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-785
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
February 15, 1941
Dear Sir
Referring to the Board's letters of October 30, 1936
(X-9729), and December 28, 1938 (S-137), it will be appreciated if
you will furnish the Board with the following data regarding the
officers and employees of your Bank who will attend the 194-1 session of the Graduate School of Banking at Rutgers University:
(1)
Total
(a)
(b)
(c)
number
Number
Number
Number
who will attend 194-1 session:
of first-year students,
of second-year students, and
of third-year students.
(2)
Total number who will attend wholly or partially at Bank's expense:
(a) Number who will be granted necessary
leave with pay,
(b) Number whose transportation expenses
will be paid ty Bank, and
(c) Number whose registration and resident
and extension tuition fees will be
paid ty Bank.
(3)
Total number who will attend entirely at their
own expense during their annual vacations.
It will also be appreciated if you will advise the number
of officers and employees at your Bank who have attended the first
or second sessions, or both, but who will not attend this year.
Very truly yours
L,
ii • P.
r # Bethea
De uneu.,
Assistant Secretary
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-786
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For release in morning papers,
Tuesday, February 18, 1 % 1 .
The following summary of general
business and financial conditions
in the United States, based upon
statistics for January and the
first half of February, will appear in the March issue of the
Federal Reserve Bulletin and in
the monthly reviews of the Federal
Reserve Banks.
Industrial activity continued at a high level in Januaiy and
distribution of commodities was maintained in large volume.
Production
In January volume of industrial production declined less
than seasonally and the Board's adjusted index rose one point further
to 139 per cent of the 1935-39 average.
There were further consider-
able increases in activity in industries making machinery, aircraft,
ships, and similar products important in the defense program, and* output of industrial materials, such as steel and nonferrous metals, continued at near capacity rates.
Lumber production also was in unusually
large volume owing to demand arising from construction under the defense
program as well as from private building.
Automobile production, which ordinarily declines considerably
at this time of year, was maintained at a high rate in January and the
first half of February.
This reflected in part an unusually large vol-
ume of retail sales and in part the industry's efforts to build up
R-786
dealers' stocks of cars as much as possible with a view to having an
adequate supply on hand in case priorities or work on defense orders
should necessitate curtailment of automobile production.
Currently
dealers' stocks of new cars are probably near record levels.
In the cotton textile industry, activity in January showed
some further increase from the record level reached in December but the
rise was less than usually occurs at this season.
At wool textile mills
there was some decline from the high level of November and December,
while output at rayon mills was maintained in large volume.
Defense
program orders for textiles, particularly wool and cotton products,
have been substantial for some time, and these combined with considerable civilian demand have resulted in the accumulation of large order
backlogs at most mills.
Activity at meatpacking establishments was
reduced in January owing chiefly to a sharp decline in hog slaughter,
which had been exceptionally large in the latter part of 194.0.
Shoe
production advanced by less than the usual seasonal amount following a
high rate of output in November and December.
At mines output of most metals continued at record levels in
January.
Production of fuels was sustained in large volume but was
not at such high levels as output of other minerals owing in part to
the existence of considerable stocks, particularly of petroleum products.
Value of construction contracts, as reported £y the F. W.
Dodge Corporation, declined in January.
The decrease reflected chiefly
a sharp reduction in awards for public construction from the exceptionally
-3-
R-786
7 3
large December total, which had included a number of defense projects
not previously reported by the Dodge Corporation for lack of detailed
information.
Contracts awarded for private nonresidential building
declined somewhat in January but as in December were twice as large
as the amount awarded in the corresponding period a year ago.
Awards
for private residential building increased and on a seasonally adjusted
basis were at the highest level since the middle of 1929.
Distribution
Distribution of commodities to consumers in January was maintained at the high level reached in the latter part of 194-0.
Sales at
department and variety stores declined seasonally following an unusually
large amount of Christmas trade, while sales of automobiles continued
near the rate prevailing in December.
In the early part of February
department store sales were sustained in large volume.
Total freight-car loadings, which usually decline from
December to January, showed little change this year and the Board's
seasonally adjusted index rose two points further to 86 per cent of
the 1923-25 average.
Wholesale commodity, prices
Prices of industrial materials and foodstuffs generally showed
little change from the middle of January to the'middle of February.
Some
imported commodities, principally coffee, cocoa, rubber, and tin, r6se
slightly and there were increases also in prices of lard and wool tops,
while declines were reported for livestock and meats, hides, grains,
R-786
lumber, and scrap metals.
Prices of some finished commodities, par-
ticularly textile products, showed advances in this period.
Bank credit
Total loans and investments at reporting member banks in 101
leading cities increased substantially during January and the first
half of February, reflecting largely purchases of new.Defense Notes
issued ty the Government.
Commercial loans at these banks increased
further while loans to New York security brokers and dealers declined.
United States Government security prices
Prices of United States Government securities continued to
decline in the latter half of January and the first half of February,
more than canceling the gains from the end of October to the peak on
December 10.
The 1960-65 bonds on February 14 were selling on a yield
basis of 2.28 per cent, compared with a low of 2.03 per cent on December
10.
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-7B7
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
February 17, 194-1
#
Dear Sir:
The Board of Governors concurs in the
action taken by the Conference of Presidents at
the meeting held in Washington on February 7,
1941, with respect to the Report of the Standing
Committee on Collections dated January 23, 1941•
Very truly your
Bethea
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
Vti
BOARD OF G O V E R N O R S
R-788
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
*******
February 18, 19^1
Dear Sir:
Reference is made to rny letters of
December 27, 1 9 W , and January 25, 19Ul, for*warding to you copies of the first and second
reports to the Board on the activities of the
Federal Reserve System in connection with the
Defense Program.
My third report, dated February ll+,
19lt-l, has now been submitted to the Board and
I am pleased to enclose a copy for your information.
A copy of this letter, with enclosure,
has been sent to the Field Representatives at
your Head Office and each of your Branches, if
any.
Very truly^yours,
Ernest G. Draper.
Enclosures 3
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BASKS
COPY TO FIELD REPRESENTATIVES
(Enclosure to Presidents and Field Representatives only)
February lb, 192! 1
Board of Governors
Governor Draper
SUBJECT:
Third Report of Defense
Activities
Reports for the month of January have been received
from all Federal Reserve Banks covering activities of their
field representatives in behalf of the Defense Program and a
summary statement thereof is attached for the Board1 s information.
There is also attached a summary statement of the
record which we maintain of the inquiries received from the
Federal Reserve Banks requesting information cr assistance
with respect to various financial and other problems that
have arisen*
The Presidents of the Federal Reserve Banks met in
Washington on February 7 for the purpose of discussing with
Mr e Mehornay and myself the functions and organization of the
Defense Contract Service, and the new Defense setup at the
Reserve Banks, The new setup is outlined in detail in the
memorandum record of the meeting, copies of which have been
furnished Board members and the presidents of all Fed ral
Reserve Banks.
Attachments 2
SUMMARY OF CERTAIN POINTS OF INTEREST CONTAINED IN FEDERAL
RESERVE BANK REPORTS ON ACTIVITIES OF FIELD REPRESENTATIVES
IN BEHALF OF THE DEFENSE PROGRAM DURING JANUARY 1961
Boston
Defense inquiries showed a marked increase during the
month of January. Most inquiries are from small companies that do
not manufacture any particular type of article desired by either
the Army or the Navy. These companies, however, have facilities
that might qualify them as subcontractors.
A great number of banks are financing their customers on
their general lines of credit without any assignment of contracts.
In many cases the larger companies, especially those receiving substantial cash advances under British contracts, are able to finance
themselves.
The Governor of each State in New England has appointed a
development commission, which has surveyed a large number of plants.
Financial information with respect to a number of companies has been furnished the Defense Commission, the Watertown Arsenal, the Ordnance Department in Boston, and the Board of Governors.
An inquiry has been received from a member bank as to whether the Board will require reports from member banks on the number
and amount of Defense loans made and rejected.
Defense loan committees have been organized in each State
in New England with the exception of Vermont, which expects to organize such a committee at a meeting on February 12. 'The Reserve Bank's
representative in Connecticut attended eight meetings of clearinghous
groups during January.
Mew York
Representatives of the Reserve Bank have actively participated in a number of group bank meetings.
Many banks of the District have been in touch with the Federal Reserve Bank and a great deal of consultation has developed by
telephone, correspondence, and direct interview, relating primarily
to the mechanics and procedures with respect to the various types of
advances secured by assignments of clai:is under both supplies and
Emergency Plant Facilities contracts.
-2-
New York (Continued)
Comparatively few concerns have inquired regarding the
facilities of the Reserve Bank to finance supplies contracts. In
such limited cases discussion has developed that the concerns
have not ascertained what credit might be forthcoming from their
own banks of account. It has been suggested that they carefully
review the situation with their own banks and if such credit accommodation is not forthcoming to return to the Federal Reserve Bank
for a further review of the case.
Credit investigations have been made for the War Department, Defense Commission, and for three other Federal Reserve Banks
Philadelphia
The Reserve Bank's representative has attended meetings
at which the Defense Prograi- was discussed.
Numerous conferences have been held on Defense activities
with representatives of banks and business concerns and assistance
has been rendered in both fields in effecting assignments of claims
under Defense contracts.
Two visits were made to Washington in connection with a
large Army contract let in the Wilkes-Barre area.
Interchange of information with respect to particulars un
der contracts awarded has been effected by correspondence and telegrams with other regional banks.
Five applications received during January for Defense
financing under Section 13b have been approved in a total amount of
$349,000 and one application for $20,000 has been rejected.
Cleveland
Representatives of the Reserve Bank attended a number of
group meetings relating to the Defense Program. Two plant visitations were made for the purpose of discussing the problems of subcontracting and "farming out" work.
Excellent cooperation has been obtained from the local
Ordnance and other Procurement Officers and all problems and questions presented to them have been handled quickly and satisfactorily. Questions referred to Washington also were handled quickly
and completely where an answer was available.
Cleveland (Continued)
From the Reserve Bank's point of view it would be highly
desirable if matters from the Defense Commission could be transmitted
through the Board's office. Reference is made to inquiries such as
the one from the Defense Commission, dated January 27, pertaining to
Aircraft Incorporated. Prior to receipt of the wire on
January 28 canceling the inquiry, contacts had been made with several
persons who, it was felt, might assist as subcontractors. One of the
Defense Commission's wires also asked for credit data about companies
and it would appear preferable to subi.it information of this character direct to the Board of Governors to use as it sees fit.
Richmond
Representatives of the Federal Reserve Bank have addressed
group meetingsof bankers held in several states.
Through quick cooperation of the Board's office, the Reserve Bank was able to advise a bank within 2L, hours, in response to
an inquiry, that the Wavy Department stated a clause in a contract
indicating that it was not "transferable" had nothing to do with an
assignment of the claim. The bank expressed its gratification at
such prompt action and asked if this case could be used at group meetings as an illustration of the splendid service being rendered by the
Federal Reserve Banks.
Within a few hours the Reserve Bank was able to furnish the
Board with information desired about a company that had been awarded a
$6,000,000 contract and had requested an advance of $4.00,000.
In response to a request from the Defense Commission the
First Vice President visited a large shipbuilding plant and reported
thereon.
During January applications for industrial loans aggregating $1,662,500 were received from six concerns engaged in Defense
work. Several banks were interested in participating in these loans
to the extent of $757>125. Judging from inquiries received, it appears that the Reserve Bank will be requested to assist in a substantial number of loans to concerns engaged in furnishing Defense supplies.
Atlanta
No case has cone to the attention of the Reserve Bank where
a concern having a Defense contract has been unable to obtain satisfactory financing when such assistance was needed.
Atlanta (Continue;!)
At each of the meetings of the various State bankers associations called for the purpose of discussing Defense contract financing, a representative from the Federal Reserve Bank has attended.
There has been a large volume of general correspondence
answering questions regarding the Assignment of Claims Act of 1940
and the lending powers of the Federal Reserve Banks under Section 13b
of the Federal Reserve Act.
Several concerns have stated that they were unable to bid
for Government contracts because the invitations called for the supply
of products in quantities beyond their capacities. Such concerns were
anxious to have the size of the contracts reduced to enable thorn to
enter bids. As an alternative, it has been suggested that approval
be given to a plan under which an association or group of small businesses whose combined capacities are capable of handling large Government contracts, but who as individuals are too small, might enter bids
with the Army and Navy for Defense contracts.
Chicago
The Reserve Bank's field representative attended a number
of meetings and discussed the activities of the Reserve Bank relative
to the Defense Program.
Credit investigations have been made for the Jeffersonville
Quartermaster Depot and for the Assistant Secretary of War.
A survey has been made with respect to potential subcontract
or facilities for iron and steel castings.
Acknowledgments have been sent direct to all concerns that
have submitted questionnaires relating to facilities for Defense supplies and each concern has been supplied with copies of the Army Purchase Information Bulletin and of the pamphlet entitled "Selling to
the Navy".
Bankers on whose behalf the Reserve Bank has had occasion
to wire the Board relative to matters requiring attention in Washington have expressed appreciation of the service and the promptness
with which results have been obtained. It is believed valuable assist
ance has been rendered to both bankers and businessmen in connection
with many problems that have been presented.
St. Louis
Requests were received for specific information from Defense Commission representatives and officers of the War Department
and information was furnished to the extent it was available. Information was also furnished several concerns with respect to the
amortization provisions of Section 124 of the Internal Revenue Act.
Assistance was given to banks in preparing the necessary
documents in making loans to Government contractors and in obtaining prompt returns of the acknowledged notices of assignment from
the War Department.
The principal difficulty encountered during the month was
that of trying to find some concrete reply to give to the small manufacturer as to how his facilities might be utilized in the Defense
Program. It seems quite apparent that because of the details of administration and inspection involved it is impracticable for primary
contracts to be split into small units which could be handled by the
smaller manufacturer.
Minneapolis
The Reserve Bank obtained a commitment from a large jewelry manufacturing company to the effect that it would undertake the
manufacture of surgical instruments if satisfactory arrangements
could be made with the Chicago District, Medical Procurement Office.
A small manufacturer of special surgical instruments has agreed to
serve as a primary contractor, utilizing the facilities of numerous
small shops by subcontracting certain steps in the manufacturing
process to each of them. The management of one of the largest printing organizations in the District has shown interest in the manufacture of surgical instruments in part of its shop.
Largely as a result of conversations with Mr. Morris L.
Cooke, of Mr. Hillman's office, the mayors of a number of Minnesota
cities have formed "Minnesota Defense, Incorporated", the objectives
of which are about the same as those of the Reserve Bank. The organization contemplates maintaining a "new business representative" in
Washington but does not intend to set up a local office paralleling
that of the Reserve Bank, with records of facilities of individual
shops.
The Governor of Minnesota announced early in January that
he would ask for an appropriation to establish a State Defense Contract Procurement Service. After the Reserve Bank explained its services the State Defense Coordinator announced that "... after careful
-6-
Miimeapolis (Continued)
consideration of the facilities which the Federal Reserve Bank offers in clearing information on defense contracts, the State effort
in this connection would be coordinated with theirs and all duplication avoided."
Arrangements have been made with one of the local papers
to publish each day a list of items on which invitations to bid are
current.
Through arrangements previously made for a free interchange of information between the Reserve Bank and most of the principal chambers of commerce in the District, the information contained
in the National Association of Manufacturers' questionnaires returned
to them is available to the Reserve Bank. In view of the discontinuance of the form, "Facilities for Defense Supplies", and the need for
some substitute form, the Reserve Bank is considering the use of the
N.A.M. form both for office and field use.
Kansas City
Activities in the Defense Program have continued to consist,
for the most part, of the dissemination of information to banks, bankers, and small manufacturers in the District.
Information has been furnished the United States Engineers
regarding contractors capable of handling construction projects involving $1,000,000 or more.
Representatives of the Reserve Bank have attended a number
of meetings to explain the activities of the System in tho Defense
Program.
The recently announced Defense Contract Service, Office of
Production Management, may provide a solution for problems with which
the Reserve Bank has had to deal in connection with an unusually large
number of inquiries relating to the utilization of idle plant facilities.
At the head Office and at all branch offices there have been
a large nurnoei' ox out-of-town visitors, mostly bankers, all of whom
have made inquiries regarding certain phases of the Defense Program and
have expressed their desire to cooperate.
Dallas
Representatives of the Reserve Bank attended several meetings at which the Defense Program was discussed.
Field representatives called upon General Brandt, the Commanding Officer of Randolph Field, to discuss with him the financing
of civilian aviation training schools. Other conferences have been
held with General Brandt and have resulted in a thorough understanding upon his part of the activities of the Reserve Banks in connection with the Defense Program.
The distribution of Defense work among small businesses con
tinues to be the major problem in the Eleventh District. Advice has
been received of several pooling arrangements whereby the participant
hope to obtain Government orders or subcontracts in considerable quan
titles.
The suggestion is made that where special surveys are conducted someone in Washington write to the concerns whose names are
submitted so that they may know their names have reached the proper
source. Inquiries have been received concerning the results of the
two special surveys conducted by the Reserve Bank and the Bank fears
that unless some official notice is taken of these surveys business
concerns in the District may lose interest in furnishing information
of that nature.
San Francisco
The Reserve Bank continued to receive numerous inquiries
concerning the Defense Program, all of which it was able to answer
without difficulty. The hearty cooperation of local Procurement Officers of the Army and Navy has been of material assistance in handling
many of these inquiries.
Representatives of the Reserve Bank attended a number of
meetings held to discuss Defense activities.
Very few inquiries concerning financial aid have been received and it is believed that all such inquiries have been handled
in a manner satisfactory to those concerned.
As a direct result of efforts of the Seattle Branch a subcontractor engaged in construction of cantonments was able to obtain
necessary financing in the amount of $250,000 f r o m a local bank.
DEFENSE CONTRACT CASES HANDLED BY THE
BOARD'S STAFF THROUGH THE
FEDERAL RESERVE BANKS
District
Subject
Atlanta
Request that we expedite transmittal of contract
from the Philadelphia Quartermaster Depot to the
contracting company.
1/6
Baltimore
Request from the Office of the Under Secretary
of War to report on the reputation and financial
condition of a concern which has been awarded a
substantial defense contract.
1/6
Philadelphia
Request that we assist a primary contractor to
acquire 50,000 pounds of copper in order to enable the concern to complete a Navy contract.
1/7
Chicago
Inquiry as to whether or not a contract stamped
"restricted" is subject to assignment.
1/6
Minneapolis
Request that we expedite acknowledgement from a
contracting officer of notice of assignment.
1/8
Houston
Request for information as to the approximate
date so-called "bankable provisions" of War
Department supply contracts will be made effective.
1/8
Chicago
Inquiry as to whether or not the report appearing in the January /+ issue of "Prats Service"
relating to a bankable subcontract refers to
supply contracts or EPF contracts.
1/8
Chicago
Inquiry as to whether there is any hazard in
making an advance on a contract which bears a
notation that "funds have not as yet been appropriated."
1/8
Richmond
Offer from a local bank of a tract of land for
additional facilities in connection with Remount
Station at Front Royal, Virginia.
1/8
Houston
Inquiry as to what, if anything, can be done to
assist a textile plant which submitted the low
bid on certain material for the Red Cross and
started manufacture before being awarded the
85
8 6
-2-
Subject
Date
District
1/8
Houston
(Continued)
contract. Following the opening of the bids and
prior to awarding the contract, the Red Cross
changed specifications and invited bids on a
different type of item, with the result that the
subject company will have on its hands the goods
which have been manufactured and cannot be delivered.
1/8
Boston
Request for information as to the meaning of
certain preference ratings which appear on Government defense contracts.
1/9
San Francisco
Request for advice as to when payments might be
expected by a company engaged in the manufacture
of bake ovens for the Quartermaster Corps.
1/10
Cleveland
Request for advice as to information on priority
of rights between sureties and assignees.
1/11
Richmond
Request from the Office of the Under Secretary
of War to furnish a report on the reputation and
financial condition of a concern which has requested an advance on a $6,000,000 defense contract.
1/11
Richmond
Inquiry as to whether or not a provision of a
Navy contract relating to.the assignment of the
contract prevents the assignment of claims resulting therefrom.
1/13
Richmond
Request for names and titles of Army and Navy
officers in charge of construction in Norfolk
area and Camp Lee area.
1/13
Boston
Request from the Office of
of Navy to obtain a report
and financial condition of
an advance on a $1,000,000
1/14
Boston
Request for information as to whether or not a
contract for screening at Camp Devens will be
awarded by the War Department or the general
contractor.
1/14
Philadelphia
Request for advice as to the best procedure for
a subcontractor to follow to be assured that
payments due from a prime contractor on a construction project would be remitted to the bank
financing the subcontractor.
the Under Secretary
on the responsibility
a concern requesting
defense contract.
67
-3Subject
Date
District
1/14
Cleveland
Request for information as to the best procedure
to be followed by a sub-subcontractor to make
application for an EPF contract when no single
branch of either the A m y or Navy can be designated as receiving the major portion of the
concern's output.
1/15
Cleveland
Request from the Office of the Under Secretary
of War to report on the reputation and financial
condition of a concern which has requested an
advance on sn $8,000,000 Ordnance Department contract.
1/14
Chicago
Request for the name of the proper official of
the War Department to be communicated with in
connection with supplying certain items for use
in the construction of cantonment camps.
1/15
Philadelphia
Request that the Federal Reserve Bank be supplied
with a copy of the contract entered into by the
Ordnance Department and a contracting company,
involving approximately $3,500,000. The Reserve
Bank contemplates advancing the concern approximately $2,000,000.
1/16
Chicago
Inquiry as to whether or not a contract which
contains provisions making it nonassignable can
be amended so as to permit assignment of payments
accruing thereunder.
1/17
Memphis
Request for the names and addresses of the contractors awarded the construction contract for
the ammunition loading plant at Milan, Tennessee.
1/17
Cleveland
Request for information as to the type of transaction entered into by the Wright Aeronautical
Corporation and the Defense Plant Corporation.
1/17
Minneapolis
inquiry as to whether or not a concern can qualify for an EPF contract prior to the time it is
awarded a defense contract which will make it
necessary to increase its facilities.
1/21
Philadelphia
Request for information as to the status of an
application addressed to the Secretary of the
Navy by a subcontractor for an EPF contract.
88
District
Subject
Cleveland
Inquiry as to the correctness of a press statement regarding loans made by banks, secured by
EPF contracts; loans made for plant construction
by the Defense Plant Corporation; and the number
and amount of supply contracts which have been
assigned.
1/21
Cleveland
Request for the name of the Array officer designated to be in charge of construction of a T.N.T.
plant at Sandusky, Ohio.
1/22
Philadelphia
Request for advice as to whether or not a contract entered into by the Construction Quartermaster, Borinquen Field, Puerto Rico, must be
approved by the Secretary of War.
1/23
Chicago
Inquiry as to the proper agency to be communicated with by a group of contractors desiring to
bid on defense housing projects.
1/21
Philadelphia
Request from the Office of the Under Secretary
of War to obtain a report on the responsibility
and financial condition of a concern requesting
an advance on a $280,000 Ordnance contract.
1/24
New York
Request for advice as to the proper charge that
a bank should make for handling escrow funds
advanced by the War Department on a defense contract.
1/2]
Cleveland
Request from the Office of the Under Secretary
of War to obtain information as to the responsibility and financial condition of a construction
company which is being considered for a substantial cost-plus-a-fixed-fee contract.
1/21
Chicago
Request from the Office of the Under Secretary
of War to obtain information as to the responsibility and financial condition of three construction companies which are being considered
for a substantial cost-plus-a-fixed-fee contract.
1/21
Minneapolis
Request from the Office of the Under Secretary
of War to obtain information as to the responsibility and financial condition of three construction companies which are being considered
for a substantial cost-olus-a-fixed-fee contract.
89
-5Date
District
1/21
New York
Request from the Office of the Under Secretary
of War to obtain information as to the responsibility and financial condition of eight construction companies which are being considered
for a substantial cost-plus-a-fixed-fee contract.
1/27
Chicago
Inquiry as to whether claims accruing under a
purchase order issued by the Government Printing
Office are assignable.
1/27
Boston
Request from the Office of the Under Secretary
of War for information as to the responsibility
and financial condition of a concern requesting
an advance payment on an Ordnance contract involving approximately $2,500,000.
1/27
Cleveland
Request that monies payable to an assignee bank
be made payable to the bank only and not to the
bank as assignee for the contracting company.
1/27
Cleveland
Inquiry as to the proper officers of the War
Department to be communicated with in connection with an EPF contract for a sub-subcontractor.
1/27
Minneapolis
Inquiry as to whether certain cartridge containers for which the Navy Department invites
bids are to be of wood or metal construction.
1/21
New York
Request from the Office of the Under Secretary
of War for information as to the responsibility
and financial condition of a company requesting
an advance on a Medical Corps contract involving approximateely $200,000.
l/28
Dallas
Request for names and locations of procurement
officers of Array and Navy who purchase athletic
uniforms and equipment.
1/30
Chicago
Request from the Office of the Under Secretary
of War for information as to the responsibility
and financial condition of a concern being considered for a substantial cost-plus-a-fixed-fee
contract.
1/30
Minneapolis
Request from the Office of the Under Secretary
of War for information as to the responsibility
and financial condition of two concerns beingconsidered for a substantial cost-plus-a-fixedfee contract.
Subject
y O
Date
District
1/30
Cleveland
Request from the Office of the Under Secretary
of War for information as to the responsibility
and financial condition of a concern being considered for a substantial cost-plus-a-fixed-fee
contract.
1/30
New York
Request from the Office of the Under Secretary
of War for information as to the responsibility
and financial condition of two concerns being
considered for a substantial cost-plus-a-fixedfee contract.
l/31
Chicago
Request that we expedite action on an application to assign claims accruing under a contract
entered into prior to October 9, 1 % 0 .
1/28
Cleveland
Request for information regarding completion
bonds required by the R.F.C. on construction
contracts.
Subject
R-7S9
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For immediate release
February IS, 1941
The Federal Advisory Council of the Federal Reserve System
met in Washington on February 16-18.
The annual organization meeting
was held on February 16, at which Edward E. Brown, President of the
First National Bank of Chicago, was elected as President of the Council, and George L. Harrison, President of the New York Life Insurance
Company, as Vice President.
Secretary.
Walter Lichtenstein was reappointed an
'The Council met in joint session with the Board of Gover-
nors of the Federal Reserve System on February 17 and 18.
General
business conditions and matters of interest to the Federal Reserve
System were discussed.
The members and officers of the Federal Advisory Council are
listed below.
As the Federal Reserve Bank of Boston has not yet se-
lected its representative a vacancy exists on the Council with respect
to the First Federal Reserve District.
District
No. 1
Vacancy
No. 2
George L. Harrison
President, New York Life Insurance
Corporation, New York, New York.
No. 3
William F. Kurtz
President, The Pennsylvania Company
for Insurances on Lives and Granting Annuities, Philadelphia,
Pennsylvania.
R-789
-2-
District
No. U
B. G. Huntington
President, The Huntington National Bank,
Columbus, Ohio.
No. 5
Robert M. Hanes
President, Wachovia Bank and Trust
Company, Winston-Salem, North Carolina.
No. 6
Ryburn G. Clay
Director, Fulton National Bknk, Atlanta,
Georgia.
No. 7
Edward E. Brown
President, The First National Bank of
Chicago, Chicago, Illinois.
No. 8
S. E. Ragland
President, The First National Bank of
Memphis, Memphis, Tennessee.
No. 9
Lyman E. Wakefield
President, First National Bank and Trust
Company of Minneapolis, Minneapolis,
Minnesota.
No. 10
W. Dale Clark
President, The Omaha National Bank,
Omaha, Nebraska.
No. 11
R. E. Harding
President, The Fort Worth National Bank,
Fort Worth, Texas.
No. 12
Paul S. Dick
President, United States National Bank,
Portland, Oregon.
OFFICERS
Edward E. Brown, President
George L. Harrison, Vice President
Waiter Lichtenstein, Secretary
EXECUTIVE COMMITTEE:
Edward E. Brown, ex-officio
George L. Harrison, ex-officio
W. F. Kurtz
B. G. Huntington
Robert M. Hanes
S. E. Ragland
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-790
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E BOARD
*******
February 19, 194-1
Dear Sir:
The Board of Governors of the Federal Reserve System is
advised that the following holidays will be observed by Federal
Reserve Banks and branches during the month of March 194-1:
Dallas
El Paso
Houston
San Antonio
In observance of
Texas Independence
Day which falls on
Sunday
March 15
(Saturday)
Nashville
Memphis
Birthday of Andrew
Jackson
March 25
(Tuesday)
Baltimore
Maryland Day
March 3
(Monday)
On the dates given the offices concerned will not participate in either the transit or the Federal Reserve note clearing through the Interdistrict Settlement Fund. Please include
transit clearing credits for the offices affected on each of the
holidays with your credits for the following business day. No
debits covering shipment of Federal Reserve notes for account of
the Federal Reserve Bank of Dallas should be included in your note
clearing of March 3.
Please notify branches.
Very truly yours,
F. A. Nelson,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
BOARD OF G O V E R N O R S
8 4
OF THE
FEDERAL RESERVE SYSTEM
R- 791
WASHINGTON
A
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
February 20,
19hrl
Dear Sir:
On January 31 we sent five copies of a
"Supplementary List showing L'ajor Defense Contracts Awarded by the War and Navy Departments
during the Month of December 191*0" to the field
representative at your head office and two copies
to each of your branches, if any.
We are today mailing to the above mentioned representatives a like number of copies of
a list of contracts awarded during January 19l'rl«
Very truly^yours,
Ernest G. Zraper
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Copy to field representatives)
BOARD OF G O V E R N O R S
9 5
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-792
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
February 21, 19A1
Dear Sir:
There are enclosed for your information a table showing applications for membership received ty the Board during 194-1,
and a statement containing excerpts from the
bank relations reports submitted ty the Federal Reserve Banks for the month of Januaiy.
L. P. Bethea,
Assistant Secretary
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-792-a
BANKS ELIGIBLE* FOR FEDERAL RESERVE MEMBERSHIP ON DECEMBER 31,
1939. AND BANKS WHICH APPLIED FOR MEMBERSHIP DURING 1941
Federal
Reserve
pistrict
Boston
Nerf York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Number of Nonmember Commercial Banks Eligible* for
Federal Reserve Membership
on December 31, 1939
Total i On Par List
Number of Banks
Which Applied for
Federal Reserve
Membership During—
January i This Year
Deposits of Banks
Deposits of Nonmember
Commercial Banks Eligible* Which Applied for
for Federal Reserve Member- Federal Reserve
ship on December 31, 1939 Membership During—
January
1 This Year
Total
On Par List
(In thousands of dollars)
141
224
225
475
141
224
225
474
0
5
1
0
0
5
1
0
469,330
981,529
550,836
577,670
469,330
981,529
550,836
577,367
0
8,100
1,700
0
0
8,100
1,700
0
394
484
1,219
664
232.
52
1,079
434
2
0
5
z
2
0
5
2
481,555
302,655
1,114,286
428,385
396,447
70,987
1,054,464
309,111
700
0
2,300
800
700
0
2,300
800
420
487
282
194
78
402
174
182
0
0
0
0
0
0
0
0
189,225
198,993
154,549
545,398
53,439
178,372
110,025
541,768
0
0
0
0
0
0
0
0
5,209
3,697
15
15
5,994,411
5,293,675
13,600
13,600
"'By eligible banks is meant banks with sufficient capital stock to meet the minimum statutory capital requirements
for Federal Reserve membership
R-792-b
February 21, 1941
Not for Publication
EXCERPTS FROM BANK RELATIONS REPORTS
FOR THE MONTH OF JANUARY 1941
BOSTON
Loans and discounts had increased at all banks visitod—all
located in Connecticut—and earnings for the past six months were better than for the corresponding period of a year ago. Employment and
pay rolls showed an increase at all points and retail trade was said
to be satisfactory.
At most of the banks visited, discussion was had of some
phase of the activities of the Federal Reserve System in relation to
the National Defense Program.
NEW YORK
Ulster County, New York, is situated on the west bank of the
Hudson River approximately midway between New York City and Albany and
extends westward into the Catskiil Mountain region. This county is
served by 14 commercial banks (all members) and 6 savings institutions.
The managements of five commercial banks are giving consideration to
reductions in rates on savings deposits and two may go to a flat 1 per
cent. One of the two institutions paying 2 per cent on the entire balance is endeavoring to attract deposits in view of a brisk loan demand
and will continue to pay this rate.
It appears that if taxable bonds yielding a higher return are
issued, they will meet with favor among the bankers. The president of
one savings bank, which in the seventy-two years of its existence is
said to have never bought a corporate bond, points out that since savings institutions pay no Federal income taxes, any higher return from
Governments will result in substantially larger profits to this group.
Nearly all banks in the county are carrying large amounts of idle cash.
Loan demand in this territory has been improving since the
middle of 1940. In several instances, sizable increases have resulted
directly from lower lending rates which were adopted when the competition of Albany banks was felt.
Business throughout Ulster County is reported bo be quite
satisfactory* Agriculture is of major importance, chiefly dairy farming and fruit growing, both of which have enjoyed better conditions
during the past year.
-2-
R-792-b
Trade in the Catskill Mountain region is dependent chiefly
upon vacation trade, which was characterized as spotty during the
past summer.
The Thirteenth Annual Mid-winter Meeting of the New York
State Bankers Association was held in the Auditorium of the Federal
Reserve Bank of New York on Monday, January 20, 1941. Approximately
500 attended the morning and afternoon sessions and the bankers were
guests of the Federal Reserve Bank at a luncheon served in its dining
room. In the evening a banquet was held at the Hotel Astor at which
about 750 were present.
PHILADELPHIA
The section covered by this report comprises three counties
in northern Pennsylvania with an area of 2,745 square miles, and a
population of 88,400.
Dairying provides the chief source of income and, while
milk prices are reported to be satisfactory, the margin of profit has
been reduced because of higher costs for feed, and the expense of the
installation of new equipment to conform with more rigid sanitary requirements .
Industrial activity has "been better than a year ago. The
shops and yards of the Lehigh Valley Railroad Company at Sayre are
quite busy, and it was estimated that some 2,000 persons are nov; employed there. The Athens plant of the Ingersoli-Rand Company, manufacturer of pneumatic tools, is operating steadily and employs 800
persons as against 600 a year ago. The tanneries are working steadily
and together employ about 1,500 persons. The plant at Elkland is considered the world's largest sole leather tannery. It has had much
labor unrest during the last four years, and the company has been involved in a series of court cases with the National Labor Relations
Board. Final decision was rendered several weeks ago by the United
States Supreme Court, and necessitated the re-hiring of five men and
payment to them of all back wages.
The officials interviewed had little comment to make relative to the Special Report to Congress. Apparently they feel that,
if it is necessary to adopt these measures, they can be met without
hardship.
CLEVELAND
Opposition to the Special Report to Congress centers entirely upon the proposal to seek statutory authority for substantially
-3—
R-792-b
increasing reserve requirements.
Nonmember banks being solicited for membership are, in increasing numbers, raising the objection that the failure of the Reserve System to handle nonpar checks is a definite deterrent. One
banker in discussing this situation, which he suggests be corrected
by Congressional action, said that it is "ridiculous that a few comparatively unimportant banks should be allowed to disrupt the check
collection facilities of the entire Federal Reserve System." Other
banks have indicated that if they became members of the System it
would probably be through surrendering State charters and becoming
members as national banks.
A shortage of farm labor in some sections is creating a
demand from farmers for loans to byy mechanical equipment.
In two industrial cities in western Pennsylvania depositors
have been requested to reduce their balances. One bank in one of
these cities has also returned a substantial postal savings deposit.
Another bank in the sane section reports that while industries are
operating at a high rate, as evidenced by checks cashed for employees,
savings deposits are not increasing as has been customary in the past.
It is stated that mary individuals are holding cash rather than depositing such funds so that if they are laid off they can go on relief.
Our impression is that the Pennsylvania Statutes provide for a disclosure to relief officials upon request of balances to the credit of
individuals seeking relief.
RICHMOND
In the Baltimore area the Sparrows Point plant of the
Bethlehem Steel Company will add $00,000 tons capacity in the current
year, and the GlennL. Martin Company had a backlog at the end of last
year of $225,000,000 and anticipates a backlog of $400,000,000 before
long. The Martin plant may increase its employment from 17,000 at the
year end to 40,000 before the current year is over.
A new hotel to cost $8,500,000, located on Sixteenth Street,
Washington, D. C., will be started about April 1.
A contract for a bag-loading plant near Pulaski, Virginia,
to employ 2,500 people, was awarded in January. It will cost $9,376,000,
and be operated by the Hercules Powder Company in connection with the
Radford Powder Mill. The contractors at the Radford plant say they
will need 3,000 more skilled workers during the next sixty days. More
than 14,000 persons are already working on the Radford plant in an
effort to get it into production trj March 15. Housing facilities in
the area are still scarce.
-4-
R-792-b
About 4,000 workers will be employed by the Newport News
Shipbuilding and Dry clock Company in the construction of 25 cargo
ships, at $1,750,000 each, during the next two years, at Wilmington,
North Carolina. Fort Bragg now under way will require 25>000 workers to provide accommodation for 65,000 officers and soldiers fcy
July 1, 194-1. So far, construction work is ahead of schedule. Some
idea of the growth in Cumberland County occasioned by the construction of $24,000,000 Fort Bragg can be gathered from the change in
the number of essential businesses over the past eight aonths. Dairies jumped from 21 to 45, cafes increased from 50 to 100, and meat
markets increased from 100 to 150.
The North Carolina State Banking Commission declined to
grant a charter for a proposed commercial credit plan Industrial bank
in Greensboro> North Carolina. The Commission said that m o national
banks in Greensboro had a right to operate installment loan departments, and that public convenience and advantage would not be promoted
by the establishment of such an industrial bank since the city already
had one industrial bank, nine "legitimate" installment paper dealers,
and sixteen credit unions.
Additional contracts of $5>000,000 at Fort Jackson, South
Carolina, are to be awarded in the near future to bring the aggregate
figure to $18,375,000.
ATLANTA
The section of Louisiana in which Lafayette, Abbeville, and
New Iberia are located suffered from unprecedented rains and high
water last summer. Some farmers in this area suffered a complete
loss of their growing crops and a majority harvested only 50 per cent
or less of their normal production. Because of this disaster it was
anticipated that the retail trade in this area during the winter would
be very light. The bankers, however, state that they were unable to
observe any appreciable decline in the amount of money spent in their
respective communities during the holiday season. They attribute the
sustained purchasing power to the tremendous amount of money being distributed in the area through oil development, WPA expenditures, and
disaster loan disbursements.
CHICAGO
Two mutual savings banks have made application for membership. According to the records of this Bank, this is the first time
that a mutual bank has applied.
-5-
R-792-b
A survey was recently made fcy this Bank of the investment in
bank building and furniture and fixtures in tie State member banks of
this district in ratio to their capital structure. As a result, the
suggestion was made to some of the brnks that these items be reduced
further, and many of them have adopted programs looking to this end.
A bill has been introduced in the Iowa Legislature which
would require all banks to remit at par for checks drawn on them. There
are at present 112 nonpar banks in the State of Iowa. Incidentally, one
nonpar bank has recently asked for membership in the System.
One of the Detroit banks has established a training school
to prepare new employees for positions, stating that it is no longer
possible to employ experienced help and that it has the problem today
of training its own personnel. All of the Detroit banks are confronted
with the same situation. Increasing turnover is largely with new employees in the lower salary brackets. The wages of skilled mechanics
who are employed full time today look very attractive to the younger
employees, and some of them apparently are shopping around for positions to their liking in other fields.
The fact that the Government recently offered for sale
75»000,000 bushels of corn at 69 cents in Chicago has had the effect
of putting a ceiling on corn prices in this area. Some satisfaction
has been expressed over the sale of insurance company farms to actual farmers. A report recently compiled shows that during the period from April 1939 to December 31, 194-0, 4,862 farms were sold. These
farms averaged 154 acres and were sold at an average price of $81.
Approximately 80 per cent of the sales were to tenant farmers on long
time contracts at lovr interest rates. It is felt that these sales
have helped to prevent a marked upturn in land prices.
Production of automobiles in January established an all-time
record for the month, and indications are that February output also
will be in record volume for that period. As a result of the continued heavy production, field stocks of new cars are growing steadily.
ST. LOUIS
Agriculture in the Tennessee area visited is quite diversified. Among the main crops are cotton, corn, hay, wheat, tobacco,
forage, and fruit, including strawberries. With exception of strawberries, yields the past season were good, and farmers made some money.
Dairying and livestock raising have expanded notably in recent years.
Prices received and being paid for the 1940 tobacco crop are disappointing to producers.
-6-
R-792-b
At Milan, Tennessee, where a 814-,000,000 shell loading
plant will be built, there is a veritable boom in progress. Even now,
before actual construction on the plant has started, housing facilities have become inadequate. New homes, mercantile buildings, theaters, etc., are being put up as rapidly as labor and materials will
permit.
It is rumored that another Government project is to be located at Medina, a small farming community six miles south of the site
chosen for the Milan establishment. As a result of these projects,
real estate values have soared, some as much as 50 per cent over a few
months back. Over this entire area building activity is at a high
rate.
An officer of a Tennessee nonmember said that he expects to
handle a large number of pay checks issued in connection with the
Milan munitions plant and other building activities in the area. If
savings on money shipments iry Federal Reserve Banks will exceed the
amount of revenue derived from exchange on cash letters, it is likely
he will be interested in further discussing membership.
Another Tennessee bank officer stated that he would join
were it not for having to give up cash letter exchange. His income
from exchange in 1940 amounted to S3,200, or 8 per cent on capital.
An Illinois nonmember subscribes regularly for new Government issues and the cashier commented regarding the small amount usually allotted to it. When his attention was called to the preferred
allotment feature of several issues in the past, he said its correspondent (an Eighth District national bark) notifies it by phone of
new issues but failed to mention the preferred subscription privilege.
Currency and Coin Displays. This Bank's collections of currency and coin have been placed on display at the parent Bank. The
currency exhibit, consisting of 254 specimens, is arranged in eight
frames, face and reverse. These are secured to a revolving standard
and have descriptive cards, written in every day language, which explain each individual bill. The specimens give a representative panorama of currency in the United States from Colonial issues to Federal
Reserve notes of the new size.
The coin exhibit, consisting of 168 specimens, is displayed
in two cases. It is so arranged that the visitor, reading the descriptive cards and viewing the specimens, is given a rounded idea of the
history of coinage from the knife money of ancient China to the wooden
nickels issued in Bellingham, Washington, during the bank holiday of
1933.
-7-
R-792-b
In addition to the above exhibits, there has also been prepared a Loan-Exhibit of currency for display by our branches and member banks. It consists of 109 duplicate specimens of notes included
in the parent Bank exhibit.
MINNEAPOLIS
The booklet prepared by the Board of Governors entitled "The
Federal Reserve System—Its Purposes and Functions" was sent to all
employees of the head office and its Helena Branch at their home addresses accompanied by a letter from the President of our Bank. We
feel there is more to be accomplished in promoting a program of education for our staff and we have several definite plans in mind.
In a current issue, confined to banking, of "Building America",
a photographic magazine of modern problems for high school use, several
pages were devoted to the Federal Reserve.
KANSAS CITY
Most of the visits in January were in connection with the
national defense work. In Kansas a series of seven regional meetings
was held for the purpose of acquainting bankers with the details of
this program and for securing a frank discussion of its problems. A
representative of this Bank appeared on the program of these conferences.
It would appear from the letters received that the Special
Report to Congress was widely read and carefully studied. In no case
was there found any disagreement with the underlying purpose of the
recommendations. Bankers seem thoroughly aware of the abnormal credit
expansion that may take place with present swollen bank reserves and
there is some apprehension that the war boom we are now entering with
its psychology of expansion may develop a credit condition difficult
to control. The hope was often expressed that the System can regain
some control of the money market and one banker gave as his opinion
that the banking structure can not stand another shock like that which
began with the deflation of v;ar prices in 1920 and culminated in 1933It was his belief that another such disaster would bring Government
ownership of banks.
There is, however, some difference of opinion regarding
specific recommendations in the report. The proposal to raise reserve
requirements stirred up the most controversy. Many bankers—even some
country bankers—seem to think legal reserves should be higher but
103
-8-
R-792-b
probably a greater number are critical. Country bankers have difficulty
in seeing any relationship between their own affairs and the problem of
excess reserves. They accept at its face value the statement that gold
imports have created the excess reserves but to the country banker this
seems, not his problem, but the concern wholly of the large city bank.
Wyoming is the only part of this district that is complaining
of lack of moisture. Bankers say the much-advertised Dust Bowl is the
wettest it has been for many years. Nearly all the cattle in that region were sold to the Government in 1934 and some places, it is said,
lost almost 60 per cent of their population in the succeeding years.
But most parts of the Dust Bowl had a good wheat crop last year and there
is an abundance of feed. The cattle population is reported to be back
nearly to normal and milk cows, especially, have increased greatly in
number in recent years.
DALLAS
The two outstanding features of our bank and public relations
activities during the month were a dinner and a public reception given
by the Bank on January 24 and. 25, respectively, in celebration of the
enlargement and complete modernization of our head office building.
After twenty years of steady growth in the volume of our operations, particularly with respect to our fiscal agency activities, it
became necessary to enlarge and modernize our quarters in order to provide adequate working space for the increased personnel at the head
office. Two more stories were added to the building, the "light well"
was filled in, and the lighting and air conditioning equipment was completely renovated. All of these improvements were completed early in
January.
With a view of strengthening the ties of our relationship with
member banks and cultivating the good will of the nonmember banks, we
gave a dinner January 24, honoring the visiting representatives of the
Board of Governors, and sent an invitation to every bank in the Eleventh
District to have one of its officers be our guest at the dinner. The
invitation list also included, in addition to our own officers, directors
and branch directors, the sixteen living former directors of our Bank,
members of the Industrial Advisory Committee, the Chief National Bank
Examiner, the Supervising Examiner for the F.D.I.C., the State Bank Commissioners of the five States attached to our District, and the editors
and publishers of the local newspapers. Four hundred persons attended
the dinner, at which addresses were made by Governors McKee and Szymcsak,
and by Walter P. Napier, President of the 'Texas Bankers Association.
-9-
R-792-b
More than one hundred of the visiting bankers and special
guests went through our building. Then we announced through the press
that on the evening of January 25 we would hold "open house". More
than 5»000 visitors were shown through the building by specially selected employees who explained the various activities of our institution. The majority of the visitors were members of local civic
organizations, such as service clubs and the faculties of public schools
and colleges, who are in a position to disseminate widely what they
learned from their visit in regard to the work and purposes of a Federal
Reserve Bank.
SAN FRANCISCO
Industries continue to expand in Los Angeles and its suburbs,
and there is a large amount of building activity to meet defense plant
and housing needs. Some concern is expressed by bankers as to the ultimate effects this will have upon the Los Angeles area.
Spokane, situated as it is in the center of the inland district in the State of Washington and serving as the trading center for
northern Idaho and portions of Oregon and Montana, is obtaining the
benefits of increased agricultural, mineral, and lumber activities in
that vast area. Mine output in that area is increasing and the outlook
for the future is quite favorable at prssent, based on the prospect of
higher metal prices. Employment in general is reported to be on the increase, with most mills and macnine shops in the city and environs working at or near capacity.
Apple growers, on the other hand, have been adversely affected
from the less of foreign markets, but other farmers are indicating
larger returns from operations, particularly from livestock and wool.
106
E-792-b
-10-
PUBLIC RELATIONS ACTIVITIES OF FEDERAL RESERVE BANKS
January 1941
Federal
Reserve
Bank
Visits to Banks
Member
Boston
New York
Philadelphia
Cleveland
Nonmember
Meetings Attended
Total
Addresses Made
Number
Attendance
Number
Attendance
9
43
43
107
3
22
24
40
12
65
67
147
3
15
7
9
1/
4,450
1,034
582
2
5
7
10
640
2,000
1,034
530
Richmond
Atlanta
Chicago
St. Louis
14
9
15
35
8
5
47
66
22
14
62
101
23
10
3
11
2,315
315
2,100
2,780
14
10
5
3
610
315
700
415
Minneapolis
Kansas City
Dallas
San Francisco
10
7
40
16
1
1
2
4
11
8
42
20
6
10
5
15
1,310
716
350
1,320
6
1
1
4
810
60
125
250
1/
Not reported.
107
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-795
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March ht 19Ul
Dear Sir:
There are enclosed for your information 15
copies of Revised Circular Number 2, relating to the
Priorities System, issued by the Director of Priorities,
Office of Production Management.
Circular Number 1, "Instructions for Filling
Out Applications for Preference Ratings", is now in the
process of revision. A supply of Circular Number 1 and
a supply of application forms for preference ratings
will be forwarded to you as soon as they are made available to us by the Office of Production Management.
Ten copies of the Revised Circular Number 2
are being forwarded to the field representative at each
of your Branches, if any.
Very truly yours,
.*
Ernest G. Draper.
Enclosures 15
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FIELD REPRESENTATIVES
(Enclosures
to Presidents and Field Representatives only)
108
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-794
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 5, 1941
Dear Sir:
As indicated in the Board's telegram of
January 16, 1941» advising you of amendment No. 4 of
Regulation U, the regulation has been reprinted to
incorporate this amendment, and copies of the reprint
are being forwarded to you under separate cover. The
reprint, of course, incorporates the postponement of
the effective date of amendment No. 4 from February
17, 1941 to February 24, 1941, of which you have already been advised.
You will note in this connection that, besides the deletion of the footnotes indicating earlier
amendments, the second paragraph of the "Explanatory
Foreword" (which is not a part of the regulation) has
been omitted. A footnote referring to the new material added try amendment No. 4 has been added at two
points in the second paragraph of section 1, and another has been added before subsections (m), (n), and
(o) of section 3 to indicate their addition hy the
recent amendment.
Very truly yours
C
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-795
109
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 7, 19l|l
Dear Sir:
Referring to the Board's letter R-7&5
January
11, 19Ul, the following changes took place during February
in the list of nonmember banks that have in force agreements with the Board pursuant to the provisions of Section
8(a) of the Securities Exchange Act of 193^4:
Deletions
New York
Forest Hills
(Hew York City)
Boulevard Bank
(Admitted to Federal Reserve
membership on February 15, 19U1)
Hudson
Hudson River Trust Company
(Admitted to Federal Reserve
membership on February 19, 19W-)
Other Changes
Pennsylvania
Philadelphia
TO THE
Mitten Bank and Trust Company
(Title changed to Mid-City Bank
and Trust Company on February
hi 19^+1)
Very truly yours,
L. P. Bethea,
Assistant Secretaryr
PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
BOARD OF G O V E R N O R S
R-796
OF THE
li-0
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO T H E B O A R D
March 10, I9I+I
Doar Sir:
There are enclosed for your information copios of the
following forms issued by the 1'or and Navy Departments and the
Advisory Commission to the Council of National Defense:
Form 1296
Notice of Procedure for Certification under
Section 121*. of the Internal Revenue Code;
Form 30i<2
Application for Government Protection
Certificate;
Form 30l|.3 Application for a Non-reimbursement
Certificate;
Form 30I4I4. Application for a Necessity Certificate,
There is also enclosed for your information a copy of a
letter which has been received from the Assistant to the Director
of Purchases and Contracts.
The revised application forms supersede those formerly
used, and as stated in our letter of January 8, 1924., R«76? # their
use is optional#
Fifty copies of each of the forms have been sent to the
field representative at your head office and
copies to the representative at each of your branches, if any. Five copies of the letter
above referred to have been sent to each field representative*
Very truly yours*
Ernest G
Enclosures 5
TO TFE PRESIDENTS OF ALL FEDERAL
http://fraser.stlouisfed.org/
COPY TO FIELD REPRESENTATIVES
Federal Reserve Bank
of St.
( Enrt
1 Louis
+.r, P r » a e 4
RESERVE BANK'S
1
J n
a
R-796a
WAR DEPARTMENT
OFFICE OF THE ASSISTANT SECRETARY
Washington, D, C.
March 6, 19Ul
Federal Reserve Bank,
Federal Reserve Building,
Washington, D. C.
Attention:
Mr. Boothe
Gentlemen:
In accordance with your request there will be forwarded to you
copies of forms, instructions, etc., pertaining to tax amortization under
Section 12lj, of the Internal Revenue Code, as amended, for distribution to
your branches.
The desirability of placing your different branches in a position to be of assistance to those seeking to avail themselves of the
advantages of this Statute is appreciated. There are, however, certain
dangers in broad distribution of the relevant forms, instructions and
information. It is appropriate, therefore, to indicate some of them.
The first danger is that the forms, instructions, etc., are
very much subject to change because the law is a new one and administration is being developed. Applicants are a little prone to consider these
documents as conclusively authoritative.
The second danger is that which results from the time limits
prescribed by the Act, It is far wiser for an applicant to file an
application (even if it is incomplete) and then to discuss it, than to
participate in involved discussions which may prove sufficiently protracted to outlaw his application when it is filed.
The third danger is that of volunteering opinions, no matter
how guarded, on such questions as what constitutes "necessity". In at
least one instance an applicant lost very substantial rights because of
following an opinion expressed in reference to a hypothetical case.
There is, however, one point which it would be helpful to have
better understood. The necessity of an expansion of plant facilities is
not necessarily determined by the need of a particular plant to expand in
order to fill government orders, The capacity of the industry as a whole
is a factor, not necessarily a controlling factor, that receives serious
consideration. Some applicants seem to feel that just because they need
1 1 1
R-796a
-2-
to expand, certification of their programs should follow as a matter
of course.
At the present time it probably is more expeditious for an
applicant to file with the War Department in Washington than with contracting offices "in the field". You will notice that in the enclosed
memorandum filing in the field is suggested. However, circumstances
have changed during recent months.
In conclusion, and in reference to something which does not
necessarily apply to tax amortization, this office is prepared to investigate and report the desirability of making loans in the interest of
the national defense. However, such requests should come from a responsible lending agency which is interested in the financing, and not from
the would-be borrower. Any such requests may be addressed to this office
in the attention of the Tax Amortization Certificate Section.
Very truly yours,
(Signed)
S. S. Duryee
S. S. Duryee
Assistant to the Director
of Purchases and Contracts
Incl,
Memorandum
BOARD OF GOVERNORS
OF THE
,***22***
FEDERAL RESERVE SYSTEM
R-797
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
\vMBBrv
********
March 11,19^1
Dear Sirs
The field representatives at head offices and branches
of Federal Reserve Banks were furnished, as stated in our letter
of January 16, 194l» R-769# a small supply of a pamphlet entitled
"Defense Contracts Awarded by Federal Reserve Districts and Industrial Areas, June 1 to December 31# 19^0", prepared by the
Bureau of Research and Statistics of the National Defense Advisory
Commission# We have just received a limited number of copies of
a revision of this pamphlet covering the period June 1# I9U0 to
January Jl, 19Ul# ton copies of which are being sent to the field
representative at your head office and three copies to the representative at your branches, if any.
Very truly
Ernest G, draper.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FIELD REPRESENTATIVES
(Pamphlets to field representatives only)
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-798
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 13, 194-1
Dear Sir:
Reference is made to the Board's circular letter R-708 dated
September 27, 194-0 regarding so-called "currency exchanges" which may
be operating in violation of section 21(a)(2) of the Banking Act of
1933. In that letter you were advised that there was pending in one
of the United States district courts in Illinois a case brought under
the provision of lav/ referred to above against a so-called "currency
exchange" which the Department of Justice regarded as a test case; and
that you would be advised of the outcome of this case upon receipt of
such information from the Department of Justice.
Under date of March 4> 1941 the Director of the Federal
Bureau of Investigation advised the Board of the outcome of such case
and for your information the text of such advice is quoted below in
full:
"With further reference to rcy letter of October 4,
1940, concerning the case involving Victor C. Singler,
Owner, Nokomis Currency Exchange, Nokornis, Illinois, you
are advised that Singler entered a plea of nolo contendere
before United States District Judge Charles G. Briggle,
Springfield, Illinois, on January 18, 1941.
"After presentation of the facts ty an Assistant
United States Attorney, the Court found Singler guilty,
and thereafter imposition of sentence was suspended and.
he was placed on probation for a period of one year."
In view of the decision in this case your Bank should continue to report apparent violations of section 21 of the Banking Act
of 1933 to the appropriate authorities.
Very truly yours,
TO THE PRESIDENTS OF
ALL FEDERAL RESERVE BANKS
L. P. Bethea,
Assistant Secretary.
1x5
BOARD OF G O V E R N O R S
*******
OF THE
FEDERAL RESERVE SYSTEM
R-799
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 17, 194-1
Dear Sir:
Under separate cover we are sending you two copies of the new
edition of the Federal Reserve Chart Book containing charts on bank credit, money rates, and business. Copies have also been sent to your Research
Department. Additional copies for the use of the Bank's staff may be procured upon request.
We are arranging to sell single copies of the new Chart Book
at 50 cents, the same price as before, and to charge 45 cents a copy in
quantities of 10 or more. Since the Chart Book has already proved to be
of considerable use in classrooms, we are sending a descriptive letter, a
copy of which is enclosed, to the economics faculties of about 150 colleges and universities throughout the country. This letter, as you will
see, describes not only the present Chart Book but also the Industrial
Production Chart Book and mentions the availability of the Bulletin and
of the System booklet for classroom use.
It is deemed desirable to secure as wide a use of the Chart
Book as possible on the basis of its merit and usefulness and not through
complimentary distribution. The prices at which the Chart Books are sold
either singly or in quantity barely cover the direct costs. Copies are
available free to members of the staff of the Federal Reserve Banks, to
Government departments, to members of the State banking departments, and
to the economics departments of colleges and universities.
It appears doubtful if the Chart Book would be of interest to
more than a relatively small number of member banks and the intention is
to make a charge to member banks for copies ordered by them. However,
should you desire to distribute copies to some of your member banks at
your own expense, it is not felt that this would be in conflict with the
Board's policy.
Very truly yours,
Enclosure
Chester Morrill,
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
1JL6
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
WASHINGTON
R-800
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 18, 194-1
Dear Sir:
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for the month
of February -1941.
Please credit the amount payable by
your Bank to the Board, as shown in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement of
credits through the Interdistrict Settlement
Fond for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Bank of Richmond by mail the
amount and purpose of the credit.
Very truly yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT RICHMOND
117
R-800-a
REPORT OF EXPENSES OF MAIN LINES OF FEDERAL RESERVE
LEASED WIRE SYSTEM FOR THE MONTH OF FEBRUARY 1941
^
„
Words Sent
by N. Y.
Chargeable
to Other
F.R. Banks
Total
Words
Chargeable
Federal
Reserve
Bank
Number
of Words
Sent
Boston
New York
Philadelphia
Cleveland
27,382
69,736
18,203
31,750
488
489
27,865
69,736
18,691
32,239
Richmond
Atlanta
Chicago
St. Louis
36,762
37,377
60,716
4.0,417
484
483
513
483
37,246
37,860
61,229
40,900
Minneapolis
Kansas City
Dallas
San Francisco
17,725
37,4-50
34,188
45,904
483
483
497
488
18,208 /
37,933
34,685
46,392
Board of
Governors
282,332
Total
739,942
483
5,374
Pro Rata
Share of
Total Expenses (1)
$
541.59
1,355.39
363.28
626.60
Payable
to
Board
of Governors
Expenses
Paid
by Banks
and
Board (2)
$
274.03
873.62
240.05
310.76
723.92
735.85
1,190.05
794.93
328.99
239.31
1,270.56
239-39
353.89
737.27
674-14
901.68
185.06
273.01
325-33
427.13
282,332
5,487.42
9,498.77
745,316
$14,486.01
$14,486.01
I
267.56
481.77
123.23
315.84
394-93
496.54
80.51(a)
555.54
168.83
464.26
348.81
474.55
$4,091.86
80.51(a)
$4,011.35
(1)
Based on cost per word ($.0194-36065) for business handled during the month.
(2)
Payments by Banks are for personal services and supplies and payments by
Board are for personal services and supplies ($1,157.98) and wire rental
($8,759.09) less amount ($4-18*30) representing reimbursement for the cost
of sending messages between the Washington office of the Leased Wire System
and the local telegraph offices of the Treasury, Reconstruction Finance Corporation, and the Commodity Credit Corporation. Personal services include
salaries of main line operators and of clerical help engaged in work on main
line business, such as counting the number of words in messages; also overtime and supper money and Retirement System contributions at the current
service rate.
(a)
Credit—reimbursable to Chicago.
R-801
BOARD OF GOVERNORS
OF THE
FEDERAJ, RESERVE SYSTEM
STATM.KNT FOR THE PRESS
For release in morning papers,
Wednesday, March 19, 1941.
The following summary of general
business and. financial conditions
in the United States, based upon
statistics for February and the
first half of March, will appear
in the April issue of the Federal
Reserve Bulletin and in the monthly
reviews of the Federal Reserve
Banks.
Industrial activity and. employment increased further in
February and the first half of March.
Buying by producers and con-
sumers continued in large volume and wholesale commodity prices, particularly of imports, advanced.
Production
In February volume of industrial output, on a daily average basis, rose more than seasonally, and the Board's adjusted index
advanced from 139 to 141 per cent of the .1935-39 average.
Increases in February, as in other recent months, were largest in the durable goods industries where a large proportion of defense
program orders have been placed.
Activity continued to rise sharply
at machinery plants, aircraft factories, shipyards, and in the railroad equipment industries.
Steel production fluctuated around 96 per
cent of capacity in January and February and rose to 99 per cent in
the first half of March.
New orders for steel continued large and,
despite the high rate of output, unfilled orders increased further.
1x9
R-801
-2-
Many orders have been placed for delivery in the second half of this
year, reflecting the prospect of heavy consumption and some uncertainty on the part of steel users regarding future availability of
supplies.
Output of pig iron, coke, and nonferrous metals was like-
wise at near capacity rates in February and unfilled, orders for these
products, too, were at exceptionally high levels.
Demand fo1* 1 'who*
continued large owing to a high rate of construction activity and output was sustained in large volume for this time of year.
Automobile
production increased in February and the first half of March to about
the peak rate attained last November.
Retail sales of new and used
cars advanced to unusually high levels.
In industries manufacturing nondurable goods, activity continued at the record levels reached in the latter part of 1 % 0 .
There
were further increases in the cotton textile, rubber, and chemical
industries and activity at woolen mills also increased, following a
temporary reduction in January.
In most other lines activity was
maintained at the high levels of other recent months.
Coal production rose less than seasonally in February but
increased considerably in the first half of March when, according to
trade reports, there was some inventory accumulation in anticipation
of a possible shutdown on April 1 at the expiration of the present
contract between the mine operators and the miners' union.
Copper
and zinc production increased in February and recently domestic supplies' of copper have begun to be supplemented by imports from South
-3-
America.
R-801
Output of crude petroleum continued at about the rate
that had prevailed during the three preceding months.
Value of construction contract awards in February declined somewhat more than seasonally, reflecting decreases in both
public and private work, according to reports of the F. W. Dodge
Corporation.
Awards for public construction, although sharply re-
duced from the high levels reached in the latter half of 1940, were
somewhat above those of a year ago, and awards for private construction were nearly half again as large as in February of last year.
Distribution
Distribution of commodities to consumers increased more
than seasonally from January to February.
Sales at variety stores
and by mail-order houses were the largest on record, making allowance
for usual seasonal changes, and department store sales were
also at a high level.
Freight-car loadings increased by about the usual seasonal
amount.
Shipments of miscellaneous freight, consisting mostly of
manufactured products, showed an increase while loadings of forest
products rose less than seasonally and grain shipments declined.
Wholesale commodity prices
Prices of a number of basic imports rose sharply from the
early part of February to the middle of March.
Cotton yarns and
gray goods and nonferrous metal scrap showed further increases in
this period and there were also advances in prices of some other
121
-It-
R-801
domestic commodities, including lead, wheat, cotton, and oils and
fats.
Br rue credit
Commercial loans continued to increase at member banks in
101 leading cities in February and the first half of -larch and these
banks also purchased additional Treasury notes and bills
connection with the defense program.
issued in
As a result of the increase in
loans and investments, bank deposits showed a further marked advance.
United States Government security prices
Prices of Government securities increased after February
15, following a sharp decline in the preceding ten weeks.
The 1960-
65 bonds on March 15 were about 3-1/8 points above their price on
February 15 and about 1-1/4 points below the all-time peak of December 10.
The yield on this issue, which increased from 2.03 per cent
at the peak in prices on December 10 to 2.30 par cent on February 15,
had declined to 2.14 per cent on March 15.
132
BOARD OF G O V E R N O R S
*******
OF THE
%
FEDERAL RESERVE SYSTEM
WASHINGTON
R-S02
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
March 18, 1941
Dear Sir:
The Board of Governors of the Federal Reserve System is advised that the following holidays will be observed fcy Federal Reserve
Banks and branches during the month of April 194-1J
April 7
(Monday)
Detroit
April 11
(Friday)
Philadelphia
Pittsburgh
Baltimore
Jacksonville
April 12
(Saturday)
Charlotte
April U
(Monday)
Richmond
General Election
Day in Michigan
Nashville
New Orleans
Memphis
Minneapolis
Good Friday
Halifax Day
Birmingham
Anniversary of Thomas
Jefferson's birthday,
which falls on Sunday
Charlotte
Easter Monday
April 19
(Saturday)
Boston
Patriot 1 s Day
April 21
(Monday)
Dallas
El Paso
April 22
(Tuesday)
Oklahoma City
Anniversary of opening
of Indian Territory
Omaha
Arbor Day in Nebraska
April 26
(Saturday)
Atlanta
Birmingham
Houston
San Antonio
Jacksonville
San Jacinto Day
Southern Memorial Day
-2-
R-S02
On the dates mentioned the offices affected will not participate in either the transit or the Federal Reserve note clearing
through the Interdistrict Settlement Fund. Please include transit
clearing credits for the offices concerned on each of the holidays
with your credits for the following business day. No debits covering Federal Reserve note shipments for account of the head offices
affected should be included in your note clearings of April 11, 14
or 21.
Please notify branches.
Very truly your
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
124
R-803
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 19# 19Ul
*******
Dear Sir:
There has been forwarded today to the Defense
Contract Officer at your Head Office and each branch, if
any, one copy each of the following itens:
" A m y and Navy Munitions Board Guide to Industrial
Symbols"
"Army Specification Guide, 19Ul"
"Classification Index of Naval Stores and Material"
"War Department Procurement Planning: Bulletin,
March 19Ul".
The above items, except the first, are among
those referred to by Mr. Robert L. M ehornay at the meeting of the Conference of Presidents of the Federal Reserve
Banks with representatives of the Board of Governors and
the Defense Contract Service on February 7J 19^1*
The remaining items referred to by Mr. Mehornay
will be forwarded to you as quickly as they are made available by the l^'ar and Navy Departments.
Very truly^Jrours,
.
l e v
Ernest G, Draper.
Enclosures U
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANES
COFY TO FEDERAL RESERVE DEFENSE CONTRACT OFFICERS
(Enclosures to Federal Reserve Defense Contract Officers only)
125
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-804
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
*******
March 19, 1941.
Dear Sir:
I am pleased to enclose for your information a copy of my fourth report, dated March IB, 194-1,
to the Board on the activities of the Federal Reserve
System in connection with the Defense Program.
A copy of this letter, with enclosure, has
been sent to the Defense Contract Officer at your Head
Office and each of your Branches, if any.
Very t m l y yours,
Ernest G, "Draper
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPT TO DEFENSE CONTRACT OFFICERS
(Enclosure to Presidents and Defense Contract Officers only)
126
DEFENSE CONTRACT CASES HANDLED BY THE
BOARD'S STAFF THROUGH THE
FEDERAL RESERVE BANKS
Date
District
Subject
I9UI
2/3
New York
Request from the Office of the tinder Secretary of War for
information as to the responsibility and financial condition of a concern which has bid on an Ordnance Department contract involving approximately $2,000,000.
2/3
New York
Request from the Office of the Under Secretary of War for
information as to the responsibility and financial condition of a concern which contemplates organizing a subsidiary company to perform a defense contract, which the
parent company will guarantee.
2/3
Cleveland
Inquiry as to whether the Defense Plant Corporation could
erect a plant on encumbered property.
2/3
Dallas
Request for information as to whether or not an electric
power company would be eligible for an EPF contract to
extend its power lines to an Army camp.
2/3
Cleveland
Request for the name and title of the proper official of
the War Department to be communicated with in connection
with Air Corps specifications for aircraft.
2/3
Richmond
Request that we expedite transmittal of a contract
entered into by the Navy Department and a contracting
concern in Baltimore.
2/3
Boston
Request that we expedite transmittal of a contract
entered into by the Navy Department and a contracting .
concern located in East Boothbay, Maine•
2/4
New York
Request for information as to the proper head of department to give consent to assign claims resulting from a
CAA contract entered into July $, 1940,
2/h
Philadelphia
Request that we expedite an acknowledgment of assignment filed with the General Accounting Office.
2A
Dallas
Inquiry as to whether or not the acceptance of a bid
by the Maritime Commission constitutes a contract, the
claims resulting from which are assignable under the
Assignment of Claims Act.
I
*
127
-2-
Subject
Date
District
2/U
Chicago
Request for information as to whether or not a bank can
act as trustee under the Assignment of Claims Act, in
order to assure payments to a subcontractor, when such
bank does not advance funds to the primary contractor.
2/U
New York
Request from the Office of the Under Secretary of War
for information as to the responsibility end financial
condition of a contractor awarded an$80,000 defense
contract.
2/5
Oklahoma City
Request from the Office of the Under Secretary of War
for information as to the responsibility and financial
condition of a contractor awarded a $5,000,000 defense
contract.
2/I4.
Kansas City
Request that we investigate the operations of an individual who has approached industrial concerns in the
Tenth Federal Reserve District, claiming to represent
the British Government and authorized to place orders
on a 10 per cent commission basis.
2/5
Dallas
Request from the Office of the Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of a concern being considered by the War Department to construct an
aircraft assembly plant at an estimated cost of
#5,000,000.
2/5
Chicago
Request from the Office of the Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of a concern being considered by the War Department to construct an
aircraft assembly plant at an estimated cost of
#5,000,000.
2/5
St. Louis
Request from the Office of the Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of two concerns
being considered jointly by the War Department to construct an aircraft assembly plant at an estimated cost
of 15,000,000.
2/5
Omaha
Request from the Office of the Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of two concerns
being considered jointly by the War Department to construct an aircraft assembly plant at an estimated cost
of $5,000,000.
128
-3Subject
Date
District
2/5
Kansas City
Request from the Office of tho Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of three concerns
being considered jointly by the War Department to construct an aircraft assembly plant at an estimated cost
of $5,000,000.
2/5
Dallas
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
of $298,000 on a $1,100,000 Ordnance contract.
2/6
St. Louis
Request for addresses of contracting officers under War
Department cost-plus-fixed-fee construction contract.
2/7
Chicago
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
of $675,000 on a $2,250,000 Ordnance contract.
2/7
Baltimore
Inquiry as to whether or not payments will be made periodically by the Jeffersonville Quartermaster Depot to a
contractor, when the goods contracted for are delivered
from time to time over a five-month period, or a single
payment made upon completion of the contract,
2/6
Philadelphia
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
of $300,000 on a $1,000,000 Ordnance contract.
2/7
Cleveland
Request for the names of proper officials of the War Deportment who have final voice in determining the kind of
wearing apparel purchased by the Quartermaster Corps.
2/7
Boston
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
of $200,000 on a $665,000 Ordnance contract.
3/8
Dallas
Request from the Office of the Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of a concern
being considered as contractor for an air base at an
estimated cost of $1,500,000.
-hSubject
129
Date
District
2/8
Minneapolis
Request from the Office of the Under Secretary of War
for information as to the ability of management, responsibility, and financial condition of two concerns
being considered jointly as contractors for an air
base at an estimated cost of $1,500,000.
2/6
Philadelphia
Inquiry as to the status of an application filed with
the Navy Department for an EPF contract.
2/ll
New York
Inquiry relating to the application of the Miller Act.
Also, inquiry as to whether or not a disbursing officer
would undertake to pay to designated subcontractors
upon completion of their work specified parts of the
amount due the prime contractor.
2/ll
Richmond
Request that we expedite transmission of a contract to
a primary contractor, awarded by the Bureau of Supplies
and Accounts of the Navy Department.
2/11
Cleveland
Request for advice as to whether certain references in
the Army Purchase Information Bulletin cover porcelain
enamel products used in Army hospitals.
2/11
Baltimore
Request for the name of the successful bidder on
52,000,000 cardboard boxes for Frankfort Arsenal,
Philadelphia.
2/11
Philadelphia
Request that we expedite acknowledgment of assignment
filed with the Bureau of Supplies and Accounts, Navy
Department.
2/lh
Cleveland
Request for figures relating to EPF contracts, loans
made by the Defense Plant Corporation, banks, and the
Reconstruction Finance Corporation.
2/13
Cleveland
Request for names of concerns bidding on buoys for the
Nrvy Department.
2/lh
Cleveland
Request from the Office of the Under Secretary of War
for information on the management, responsibility, and
financial condition of a concern requesting an advance
of $700,000 on a $2,500,000 Ordnance contract.
-5-
130
Subject
Date
District
2/lk
Cleveland
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
of $30,000 on a #100,000 Chemical Warfare contract.
2/17
Chicago
Inquiry as to who has authority to purchase encyclopedias for the Army and C.C.C. Camps,
2/lh
Chicago
Request for information as to terms of a contract awarded
by the Holabird Quartermaster Depot.
2/13
Dallas
Inquiry as to the proper official of the War Department
to communicate with regarding the sale of property near
Camp Walters, Texas, suitable for building sites for
officers' quarters.
2/17
Atlanta
Inquiry as to whether or not the prohibition against assignment can be removed from a construction contract involving 300 housing units at Tampa, Florida, for the
Public Buildings Administration.
2/17
Philadelphia
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
of $800,000 on a $2,700,000 Ordnance contract.
2/lh
Chicago
Request for the name of the proper official of the
Quartermaster Corps to be communicated with regarding
the inability of a concern to obtain defense orders.
2/19
Atlanta
Request as to whether or not a concern, if awarded a
contract to build a certain type of boat, will be eligible for an EPF contract.
2/18
St. Louis
Request for advice as to the terms of a contract to be
awarded a textile mill in Mississippi, which has received a letter of award from the Quartermaster Depot
in Philadelphia.
2/19
Chicago
Inquiry as to whether or not a Signal Corps contract,
marked "confidential", is assignable under the provisions of the Assignment of Claims Act.
2/19
Dallas
Request for information as to whether under the Assignment of Claims Act, the "separate interests of joint
contractors under a cost-plus-fixed-fee construction
contract may be individually assigned, or whether both
contractors are required to join in the assignment.
-6-
>
131
Sub j edt
Didtfict
Chicago
Inquiry as to whether a paz'thership contemplating expansion of plant facilities because of defense work as
a subcontractor can be granted authority to amortize
the cost of such facilities over a period of five years.
2/20
Cleveland
Inquiry as to whether it is the standard practice of the
Army and Navy to require the pledge of collateral to secure
funds advanced by the Government to primary contractors.
2/20
Chicago
Request that we expedite transmission of a set of blueprints in connection with certain articles required by
the Navy to a concern desiring to bid on such articles.
2/20
Chicago
Request for information concerning defense housing projects in the vicinity of Charleston, South Bend, and
Bloomington, Indiana.
2/20
Chicago
Request that we expedite action by the Priorities Committee of the Army-Navy Munitions Board in connection
with a request for a preference rating from a concern
in need of nickel anodes.
2/20
Chicago
Request for information as to the status of a payment
due a contractor veho has made delivery of articles
contracted for by Edgewood Arsenal, Maryland.
2/18
Boston
Request for information from the War Department as to
the status of the industrial jewel market.
2/20
Chicago
Inquiry as to the proper official of the Navy to be
communicated with in connection with superchargers for
Diesel engines.
2/21+
Chicago
Inquiry as to the proper officials, of the War Department
to be communicated with in connection with construction
work at Fort Benjamin Harrison, Indiana, and a building
located in Indianapolis, leased by the Chemical Warfare,
Procurement Division.
2/24
Los Angeles
Request for information as to the procedure to be followed by a contractor desiring to obtain an advance payment on a contract with the Chemical Warfare Service.
2/2U
New York
Inquiry as to whether or not under the Assignment of
Claims Act a bank can act as trustee for an individual
making an advance to a contractor, when the trustee bank,
itself, is not advancing funds.
>
.
132
-7Subject
Date
District
2/2k
New York
Inquiry as to whether receipts of notices of assignment
of claims in connection with a plant facilities contract
should be filed with the Government.
2/214,
Atlanta
Request for information as to whether an association of
woodworkers can submit bids on Government contracts and
then parcel out the work to two or more of its members.
2/2U
Chicago
Request that we expedite payment on a contract for certain machinery shipped by the contracting company to
Edgewood Arsenal, Maryland.
2/25
Mew York
Request that we expedite transmission of a contract from
the Philadelphia Quartermaster Depot to the contracting
company.
2/25
Chicago
Request that we investigate the status of a contract for
the construction of temporary barracks at Chanute Field,
Illinois.
2/27
Minneapolis
Inquiry as to whether or not the Robinson-Patman Act would
operate to establish a price bid by a manufacturer on defense vrork as a basic price for all Government agencies.
2/26
Chicago
Request from the Office of the Under Secretary of War for
a report on the management, responsibility, and financial
condition of a concern requesting an advance of $75»000
on a $250,000 Signal Corps contract.
2/26
St, Louis
Request from the Office of the Under Secretary of War
for a report on the management, responsibility, and
financial condition of a concern requesting an advance
payment on a $20,000,000 Ordnance contract.
2/20
Philadelphia
Request that we expedite acknowledgment of a notice of
assignment filed with the Chief of the Bureau of Ordnance,
Navy Department.
2/27
Cincinnati
Inquiry as to the authority of certain contracting officers
to execute Air Corps contracts and as to the existence of
unused appropriated funds for the payment of the contracts.
2/28
New York
Inquiry as to whether or not the Maritime Commission has
authority to make advance payments up to )0 per cent to
primary contractors, similar to the advances made by the
War and Navy Departments.
SUMMARY OP CERTAIN POINTS OF INTEREST CONTAINED IN FEDERAL
RESERVE BANK REPORTS ON ACTIVITIES OF DEFENSE CONTRACT OFFICERS IN BEHALF OF THE DEFENSE PROGRAM DURING FEBRUARY 1941
133
Boston
Many inquiries have been received with respect to the procedure
to be followed in applying for priority ratings. A number of requests
have also been received for application forms for priority ratings.
On two different occasions during the month a local bank requested the Reserve Bank to check with the Quartermaster at Philadelphia
with respect to delays in receiving contracts executed by that office;
also, with respect to payment covering goods shipped under such contracts.
Information with respect to the financial responsibility of certain concerns has been furnished the Harbor Defense, Portland, Mainej the
Federal Reserve Bank of Cleveland; the United States Engineer's Office,
Providence, Rhode Island; and the Board of Governors.
The Reserve Bank was instrumental in arranging financing for one
contractor through a member bank.
The clearinghouse committees in all of the New England states
continued to hold their periodical meetings. Banks throughout the industrial centers of the District are making loans and are interested in
soliciting and extending further credit to both primary and subcontractors.
New York
In furtherance of the educational program with respect to the
financing of Defense contracts, representatives of the Reserve Bank
participated in two meetings during the month.
As a result of the extensive publicity given to the activities
of the Federal Reserve System in the Defense Program many more direct
interviews were handled during the month than heretofore. Cases that appeared to have the most merit and which related more or less directly to
the immediate needs of the Array and Navy were advised to file with the
Reserve Bank a complete inventory of their machinery and equipment with
special emphasis on machine tools# The suggestion Was made that such
inventory include the name, number, type, age, and present condition of
each machine. This program was followed in lieu of the use of the
"Facilities for Defense Supplies" form which has been discontinued.
The problems of financing have not been very numerous and all
inquiries were settled in a satisfactory manner by means of referring
prospective borrowers to their commercial banking connections.
Voluminous correspondence has been handled with respect to all
phases of the Defense Program and the staff of the Board of Governors has
given very prompt service in the case of certain technical problems which
have developed from time to time.
Philadelphia
During the month representatives of the Reserve Bank addressed
two meetings relating to the Defense Program#
Several inquiries were received from municipal officials,
chambers of commerce, legion posts, etc. regarding the establishment of
Defense industries in their localities where, as a rule, idle plant
facilities exist.
The Reserve Bank's facilities were extended to a recently established shipbuilding company which was supplied with information as to
prospective subcontractors.
Various transactions under Defense contracts have been expedited
by the cooperation of local procurement and finance officers. Assistance
has been rendered procurement officers through credit investigations of
the proposed recipients of contracts.
Cleveland
The number of Defense inquiries increased after the Defense
Contract Service was announced. The establishment of priorities in a
few lines caused certain companies to request information with respect
to the Defense Program.
Representatives of many small concerns called at the bank having
been directed there by the Defense Commission or congressional representatives under the impression that the Defense Contract Service is in position to refer to them specific Defense business or to suggest a definite
Defense article which they might produce. There is some evidence of impatience and dissatisfaction on the part of small concerns or communities
which, having read about "Rehabilitation of Ghost Towns", "Aid to Small
Business" and "Seeking Production Facilities wherever Located" have not
received any Defense work. Inventorying and cataloging of facilities
offered, with the suggestion that when primary contractors request assistance the plants seeking work will be referred to the inquiring concerns, is not entirely satisfactory.
Relatively few primary contractors have requested assistance up
to this time which would enable the Reserve Bank to bring to their attention facilities available at small plants.
During February three applications for 13b loans were received.
One application involving $10,000 was withdrawn; the other two were
approved.
135
Richmond
Ha considering an application for a certificate of necessity,
the Office of Production Management requested the Reserve Bank to obtain
certain data with respect to sheet metal facilities in the Norfolk area
and the information was obtained and transmitted promptly.
The Reserve Bank agreed to join a member bank in a $250,000
loan to a Baltimore concern which is to manufacture gun shields for the
Navy, Inspection of the contract was essential but great difficulty was
experienced in having it forwarded to the manufacturer# Through the persistent efforts of the Board* s staff the contract was finally obtained.
A substantial number of concerns which have furnished Facilities
for Defense Supplies forms have advised that they have received no opportunity to do any contract work. Some of these concerns answered the Reserve
Bank's inquiry in January regarding millwork for housing projects.
Of the twelve industrial loan applications, aggregating $1,951,500
which have, been received from concerns engaged in Defense work, eleven,
amounting to $1,921,500 were approved. Financing institution participation
in these loans amounted to $795,625.
Atlanta
The Reserve Bank has agreed to issue a commitment agreement to
acquire an interest, not exceeding $500,000, in a Defense loan being made
by several member banks. The Executive Committee has approved an application of a bank for a commitment agreement providing for the acquisition by
the Reserve Bank of 50 per cent interest in a Defense loan that the bank
intends to make in the amount of $585,000. Approval has been given to the
making of a direct Defense loan not to exceed $200,000 by the Reserve Bank
to a construction company to provide working capital. Prior to approval
local banks were approached but they were not willing to participate.
Specifications relative to the construction of 14- warehouses in
Georgia were sent to another Federal Reserve Bank on date of receipt of
the request for this information. At the request of a Federal Reserve
Branch in another district a list of concerns in Tennessee, equipped to
bid as prime contractors and subcontractors on Ordnance items, was compiled
and forwarded. By communicating with the Board's staff the Reserve Bank
was able to advise a bank in Tampa within 48 hours the manner in which an
assignment of moneys due under a contract might be arranged to enable the
bank to finance the operations of a construction company# The Atlanta office of the Signal Corps was furnished with financial and other information
regarding a construction company,
Mr. Neely, recently appointed District Coordinator, called a
meeting of the Reserve Bank's Defense Staff, certain Army officers, and
others interested in the Defense program, and outlined his plans under the
new organization#
Chicago
136
It has been gratifying to find that some of the concerns which
have sought the Reserve Bank's advice have been successful in securing
Government contracts. Advice has been received from various procurement
offices that the number of requests for invitations to bid has greatlyexceeded expectations. Some manufacturers report that insufficient time
is allowed between receipt of an invitation to bid and the opening date
of the bid* Firms seeking subcontract work report that as a general
rule prime contractors are offering the least desirable portions of their
contracts to subcontractors.
A firm which advised that it was loaded beyond capacity on Defense work was furnished the names of over thirty firms in the area
equipped to handle the work specified and advice has been received that
such information was helpful and that the firm was appreciative of the
service rendered.
Various banks report negotiations under way with respect to
prospective loans to finance supply contracts and in a number of instances banks report having consummated loans of this type. The Reserve
Bank is daily advising with banks and manufacturers concerning the financing of Defense contracts and other features of the Program.
St. Louis
Representatives of the Reserve Bank have participated in a number of Defense meetings.
Assistance was rendered to a bank in obtaining a change in a
contract of a prospective borrower to contain the "no set off" clause.
Several concerns were aided in contacting prime contractors
with a view to obtaining subcontracts.
Some unfavorable comment was heard because of the delay in appointing the District Coordinator, District Manager, and staff, after the
announcement was made; also, because of the delay in furnishing to the
Reserve Bank forms for making application for priority rating after announcement was made that the fonns were available there. Unfavorable comment has also been heard because of letters received by manufacturing concerns in the Eighth District from Government procurement officers in other
parts of the country stating that the District Coordinator and his staff
could be contacted at the local Federal Reserve Bank,
Upon the request of the branch of another Federal Reserve Bank,
acting on behalf of an Ordnance Officer in the branch city, the Louisville
Branch circularized its area for information regarding machine shops,
tools, etc.
- 5 Minneapolis
1 3 7
Arrangements were made with a primary contractor for the subcontracting of an estimated million dollars of work. Subsequent to
making these arrangements office reports of 140 plants were surveyed by
the Reserve Bank's staff, 90 of which were submitted to the primary contractor. The prime contractor selected 35 reports for closer inspection
and designated three of them for the first effort. The results have been
only moderately satisfactory. One concern found it necessary to postpone
acceptance of the subcontract because of impending labor trouble. At the
end of three days the material furnished the second subcontractor had not
been touched because of a lack of machinists. The experience with the
third subcontractor was entirely satisfactory. A large firm in Duluth is
willing to subcontract all of the work that all of the machine shops in
the Duluth territory can perform but there are not enough skilled men
available to operate the machines all of the hours that they are now idle.
Copies of the National Association of Manufacturers' questionnaires returned to chambers of commerce in the larger cities in the district have been obtained and placed in the Reserve Bank's files. Since
the N.A.M. f o m was found to be difficult to use rapidly the Reserve ftapk
has prepared a form for its own use.
The principal difficulty encountered during the month was lack
of definite information regarding future operations. Textile manufacturers
have continued to complain regarding the rigidity and complicated nature of
specifications and inaccessibility of a sample of the item to be bid on.
Other manufacturers continued to complain regarding the short interval between issuance of invitations and the opening of bids.
m connection with the record of cases handled by the Board's
staff that accompanies the monthly report to the Board, it would be helpftil if the answers to the inquiries raised by the various Federal Reserve
Banks were included.
Kansas Citv
Because of the changed procedure developed at the conference
held in Washington on February 7, the activities of the Federal Reserve
Bank of Kansas City during the month of February have been materially
J
curtailed.
.
The Omaha Branch responded to an inquiry from the Board concerning the ability of two Omaha contracting firms to perform and finance a
project in the District involving $5,000,000.
The Oklahoma City Branch reports that there is still a lot of
fSthe
dealing in the Defense Program.
Dallas
During the month the Reserve Bank received and forwarded to
Washington 199 "Facilities for Defense Supplies" forms.
Thirty—five personal interviews were held in connection with
various phases of the Defense Program and, in addition, numerous inquiries were received over the telephone from banks and others.
During the month the Texas Bankers Association held four forum
discussions on the subject "Financing the National Defense Program".
These forums were conducted by a member of the Defense Loans Committee of
the American Bankers Association and the Reserve Bank's representative.
San Francisco
Interest in the National Defense Program was stimulated somewhat by the publicity given to the establishment of the Defense Contract
Service. The Pacific Coast office of the National Association of Manufacturers has made its facilities available to the Reserve Bank. Copies
of reports of surveys of plant facilities made by several of the larger
chambers of commerce in California have been forwarded to the Reserve
Bank as well as a report of survey of 300 machine shops in Utah which
was made available by the Utah Manufacturers Association.
Owners of many small machine shops have expressed an interest
in obtaining subcontracts and as a preliminary step have furnished the
Reserve Bank with descriptions of their facilities.
Representatives of the Reserve Bank attended six meetings held
to discuss Defense activities.
As a result of a request from a local procurement officer, the
Reserve Bank was instrumental in arranging through a bank for the financing of a small ($12,500) contract in which time was a factor.
BOARD OF G O V E R N O R S
OF THE
*******
FEDERAL RESERVE SYSTEM
R-805
139
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 19# 1 9 U
Dear Sir:
There have
Officer at your Head
March 19# 19^1 Press
Office of Production
System.
boon mailed to the Defense Contract
Office today ten copies of the
Release of the Division of Priorities,
Management# relating to the Priorities
There Will be forwarded to you a supply of revised application forms# to be used in requesting preference ratings as soon as they are made available to us by
the Office of Production Management.
Five copies of the Press Release are being sent
to the Defense Contract Officer at each of your Branches#
if any.
Very truly yours#
TO TEE PRESIDENTS OF ALL FEDERAL RESERVE B A M S
COPY TO FIELD REPRESENTATIVES
140
B O A R D OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-8O6
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 21,194%
Dear Sir:
There have been forwarded today to the Defense Contract Officer at your Head Office two copies of a letter, dated
March 19# from Mr# E* V# Euss, Assistant Secretary, Priorities
Division, Office of Production Management, explaining the use of
the various forms, which have been revised by the Priorities
Division of the Office of Production Management, together with
two sample sets of each of the forms referred to and ten copies
of revised Circular Number 2«
Preference Rating Certificates, Forms PD-2, PD-3,
PD-1|., and PD-*5J when executed are effective legal instruments,
and the Director of Priorities is making them available for your
information but not for distribution#
One copy of the letter, one sample set of the forms,
and three copies of revised Circular Number 2 have been forwarded
to the Defense Contract Officer at each of your branches, if any.
Very truly yours,
<f
Ernest G. Draper.
TO TIE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FEDERAL RESERVE DEFENSE CONTRACT OFFICERS
(Documents to Federal Reserve Defense Contract Officers only)
BOARD OF GOVERNORS
k
/Rvt§
'M
141
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-807
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
********
#
March 21, 1941
Bear Sir:
There are enclosed for your information a table showing applications for membership received by the Board during 1941,
and a statement containing excerpts from the
bank relations reports submitted by the Federal Reserve Banks for the month of February.
Very truly yours,
Chester Morrill,
Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-807-a
BANKS ELIGIBLE- FOR FEDERAL RESERVE MEMBERSHIP ON DECEMBER 31,
1939, AND BANKS WHICH APPLIED FOR MEMBERSHIP DURING 1961
Federal
Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
Number of Nonmemfccr Cornmercial Banks Eligible*- for
Federal Reserve Membership
on December 31, 1939
I On Par List
Total
Deposits of Banks
Numbe r of Banks
Deposits of Nonmeiaber
Commercia 1 Banks Eligible* Which Applied for
Vjhich Applied for
for Federal Reserve Member- Federal Reserve
Federal Reserve
Membership IW i n g —
Mvmbe rship During— ship on D ecamber 31, 1.939
lis Year
iOn Far List
February 1 Tr
Total
February i This Year
(in thousands of dollars)
0
0
0
0
469,330
469,330
22,900
31,000
6
11
981,529
981,529
0
1,700
0
550,836
1
550,836
700
2
2
700
577,670
577,367
141
2.24
225
475
141
224
225
474
394
484
1,219
664
232
52
1,079
434
1
0
7
2
3
0
12
4
481,555
302,655
1,114,286
428,385
396,447
70,987
1,054,464
309,111
420
487
282
194
73
402
174
182
0
0
0
0
0
0
0
0
189,225
198,993
154,549
545,398
53,439
178,372
110,025
541,763
5,209
3,697
18
33
5,994,411
5,293,675
500
0
8,400
1,000
1,200
0
10,700
1,800
0
0
0
0
0
0
0
0
33,500
47,100
* By eligible banks is meant banks with sufficient capital stock to meet the minimum statutory capital requirements for Federal Reserve membership
E-807-b
March 21, 1941
Not for Publication
EXCERPTS FROM BANK RELATIONS REPORTS
FOR THE MOUTH OF FEBRUARY 1941
BOSTON
At all points visited where mills, factories, and machine
shops are located, pay rolls and employment were increasing and retail trade was said to be good.
NEW YORK
Officers of the commercial as well as the savings banks in
Middlesex County, New Jersey, believe that many of their savings depositors will subscribe to the forthcoming issues of defense bonds in
order to take advantage of an investment that will give a higher return than the maximum rate of 1 per cent now being paid on savings
accounts. The commercial bankers also say that they will welcome the
opportunity of purchasing sizable blocks- of the future defense issues
at par, several indicating that their institutions will have tax exemption for many months to come and that the new taxable securities
will therefore produce a higher income.
Although there has been considerable increase in industrial
activity in this county in the production of goods for both military
and civilian uses, the banks have had very little demand for regular
commercial loans or for defense financing. It is said that most of
the large concerns in this area have New York City offices and obtain
their credit needs from Manhattan banks.
PHILADELPHIA
The area covered by this report comprises 3 counties in
northern Pennsylvania, with a population of 359,700, served by 25 member banks with resources of ,|155,541,000 and 13 nonmember banks with
resources of #32,484,000. Anthracite mining, dairy farming, railroad
operations, and manufacturing provide the principal sources of income.
Conditions in this area are somewhat better as far as the
farmer is concerned for prices for dairy and orchard products were
better in 1940 than in 1939• There has also been an improvement in
anthracite mining operations, although the total pay roll of this industry is considerably below what it was about fifteen years ago, when
the mines were at the zenith of their prosperity. Since that time,
-2-
R-307-b
labor troubles and higher costs of production have resulted in a wider
use of other fuels, with the result that this area has experienced
widespread unemployment for years. The manufacturing and other large
establishments in this section are busy, but defense work has, thus
far, been confined to subcontracts.
Several bankers complained that there should be more defense
work in this area, stating that there was ample man-power and factory
buildings, but admitting a shortage of mechanical equipment and management to bring the business to the plants. Local Chambers of Commerce are striving now to bring new concerns into this area to utilize
some of the idle labor, advertising the fact that labor conditions are
now much more settled than in the past.
Demand for credit is strong, but is chiefly for small amounts
and, because of poor economic conditions in recent years, great care is
exercised in the selection of risks. FHA mortgages are being considered for investment, but the bankers prefer not to place any on local
properties.
CLEVELAND
A number of banks in the Cincinnati area have sold substantial amounts of long-term United States securities.
Competition of building and loan associations is keen and
there is some evidence that bankers in this area, which has always been
a high rate section, are beginning to realize that in present conditions a 6—3 per cent rate can no longer be maintained.
Within the last few days we have had an unusual demand for
currency of the $1,000 denomination. One small bank requesting $20,000
of such currency stated, upon inquiry, that it was to pay off a large
savings depositor whom they had offered to pay in 50's and 100's but who
insisted on bills of the larger denomination. It was stated that a
rumor had been going around in that vicinity to the effect that the
Government was going to obtain from all banks a report of the amounts
individuals had on deposit, and that subsequently they would tax such
depositors 2 per cent of the amount on deposit. While the basis of
any such rumor has not been discovered, we are wondering if it might
not possibly be the result of a loose interpretation by newspapers and
other agencies of the announced Treasury program of financing a substantial part of the defense program out of savings.
-3-
R-807-b
RICHMOND
Maryland
Baltimore industries will hire more than thirty-five thousand additional skilled and semiskilled workers this year, according
to well-informed estimators.
Delivery of materials and supplies necessary for the defense programs at Maryland's five major military posts has greatly
increased rail traffic. It is necessary to move 2,320 cars into the
five posts each month, as compared to an average of only 400 cars
last winter. Most of the traffic at the present time consists of
construction supplies, such as, lumber, steel, cement, sand, etc.
Virginia
The first project of the U. S. Housing Administration now
under way in Richmond is a slum-clearance project for colored people
that will cost S3>191>000. Philip Morris & Company will rebuild the
old United States Tobacco Company plant in Richmond. Heavy increases
in cigarette demand has caused the company to expand further, here.
This company has recently made large purchases of English-made cigarette manufacturing machinery, as well as some American machinery.
Newport News Shipbuilding and Dry Dock Company has 21 ships
under construction, including 13 naval vessels and 8 merchant ships.
The naval construction includes 1 battleship, 8 aircraft carriers,
and 4 cruisers.
Appropriations for the Williamsburg restoration
agencies for 1941 amount to $3>300,000, to be divided approximately
equally between capital outlay and operating expenses.
West Virginia
The Westinghouse Electric and Manufacturing Company will
build a $3>000,000 plant near Fairmont, West Virginia, to fill the
lighting needs of new industrial plants working for national defense.
Between 800 and 1,000 persons, mostly women, will be employed in the
manufacture of fluorescent lamps after operations are started. The
plant is expected to begin production by July, and will be the largest of its kind in the world.
North Carolina
Sixty-one new industries and ninety-one additions to existing plants were established in North Carolina in 1940. Seventeen new
hosiery mills were established, and additions were made to twentythree others. This is the third straight year in which hosiery mills
145
-4-
R-807-b
have led the establishment of new "industries". The textile industry
as a whole accounts for thirty-one of the new plants and sixty-seven
of the additions. Together, new plants and additions accounted for ap^
proximately $10,000,000 in contracts for industrial construction, exclusive of equipment. Furthermore, they provided jobs for 10,000
persons, and are estimated to have added $8,500,000 to the State's annual pay roll.
South Carolina
Manufacturing industries in South Carolina in the fiscal
year 1939-1940 showed a gain in new investment of $13,449,000, or 3.4
per cent. Of this gain, $5,780,000, or 43 per cent, was accounted
for by the cotton textile industry.
South Carolina will have to import cotton for the first time
this year to meet the requirements of her mills. The crop this year
is estimated at around 1,000,000 bales, while the mills will consume
about 1,500,000 bales.
ATLANTA
Officers and representatives of the head office and branches
attended 10 national defense meetings sponsored by State banking associations and civic groups and at each an officer of the Bank described
the functions of the Federal Reserve System in the defense program, particularly with regard to defense loans.
A number of large textile plants in the eastern central area
are now operating full time on a three-shift basis.
At Pascagoula in Mississippi, a large ship building plant
is now engaged in the construction of a number of ships for the Maritime Commission. The company is presently building four ships at a
cost of $2,800,000 each and has employed 2,200 people in its plant.
It is further understood that this same company will, within the near
future, begin construction of four additional ships at a cost of fifty
million dollars in the aggregate. A housing project is under way at
Pascagoula at a cost of $2,500,000. In addition to this project many
houses are being constructed by private citizens for rental purposes.
CHICAGO
An application for membership has been received from the
largest nonmember bank in the Seventh Federal Reserve District.
-5-
R-807-b
The month of February saw a further mounting of backlogs in
the steel industry and continued lengthening of delivery dates. Except for mechanical difficulties, the rate of ingot operations in the
Chicago area has continued close to capacity. Demand has been active
for all products without exception, even including tin plate which at
this season of the year is generally not heavily demanded. Automotive and railroad buying has been especially strong. Railroads are
putting pressure on the mills for deliveries of plates for their new
car-building programsj the demand by automobile manufacturers has been
extremely heavy for sheets and strip. The automobile industry itself
continues to maintain volume operations, and stocks of new cars at
dealers continue to grow. It is reported that sales of new cars have
been excellent.
ST. LOUIS
Agricultural Conditions
In Tennessee, higher prices have resulted in heavy shipments
of meat animals to market in recent months. Newburn is one of the
largest mule markets in the State, and is experiencing activity due to
demand for draft animals created by the defense program. Outlook for
the fruit crops this year is favorable. Strawberry acreage has been
considerably increased.
In Illinois counties visited, the season to raid-February has
been favorable for fall sown grains, and present outlook for winter
wheat is mainly excellent. Prospects for peaches are also very promising. Orchards have come through the winter in prime condition.
The Kentucky area covered is important agriculturally. Largest revenues are derived from production of tobacco and the livestock
industry. The 1940 tobacco crop was larger than expected, and included
some excellent leaf. However, prices realized were disappointing.
Markets for the 1940 crop have just closed. Prices at the opening sessions were satisfactory, but receded sharply as the season progressed.
For example, the burley average ranged downward from $17.71 per cwt.
during the first week to $12.13 in the week ended February 7. Average
for the session on this type was $-15.85, or $1.86 per cwt. less than
average on the 1939 crop.
Banking Conditions
Demand for credit showed improvement through 1940, particularly during the last quarter. There has been a good demand for small
personal loans. Expansion was reported in requirements for carrying
R-807-b
livestock. Incidentally several bankers expressed concern relative
to the future of the livestock market should this country enter the
war.
One Louisville bank, which has made an extensive survey of
industrial concerns in its trade area and furnishes complete data to
customers on all Government contracts awarded, reports a fair amount
of credit extended for defense program purposes. However, but few
loans have been made 'that were based on assignment of claims against
the Government.
MINNEAPOLIS
At the request of the Chippewa Valley Bond Club, a group of
bankers who meet monthly for the purpose of reviewing their bank holdings of securities, one of our officers started a series of three lectures interpreting the Federal Reserve combined statement and discussing
with the members of the club the factors that supply and use Reserve
funds.
The general soil moisture situation in the district, especially in the Dakotas, is favorable. In general, the Northwest is in
the finest condition agriculturally that it has been in a decade or
more, for not only has there been an adequate supply of moisture last
fall, but heavy snowfalls have been experienced in most sections during the winter. Feed supplies, both grain and roughage, are abundant,
and livestock populations are at optimum levels. Because of the mild,
wet fall, cash crop raising areas were able to complete as large or
a larger portion of fall field work than usual. Fall sown rye and
wheat are in excellent condition. These favorable conditions, together with the good 1940 crop of grains, as well as livestock, are being
translated into higher business volumes for this area.
General business conditions may be said to be the best since
1929 or 1930. Retail trade during February was at the highest level
for the month since 1929 and was running about 10 per cent above one
year earlier. Building, especially residential, was in substantially
greater volume than a year ago, and the volume of manufacturing production, although a very small part of our total business picture,
was from 8 to 10 per cent above the same period for 1940.
KANSAS
CITI
Some unfavorable comment was heard among bankers concerning
what seemed to them a sudden scrapping of the information they had prepared with considerable effort in response to the defense questionnaire.
A good deal of interest has been found in the new setup announced more
than a month ago designed to help small business firms make contact
with defense work and to inform banks how they can help finance it.
In the meantime a month has passed with few developments and there is
a tendency to wait and see what comes out of it.
Some tendency was found among banks to shift from longer to
shorter-term Governments. There is some feeling that the price of
long-term bonds has passed its crest. This fact, together with the
prospect of an increase in the demand for loans, is an important factor in causing a shift to shorter maturities.
Bankers are doing considerable wondering about the wheat
situation. The almost complete blockade of Europe since last summer
has greatly restricted foreign outlets and, with the growing difficulty of Great Britain in establishing funds in this country to buy
urgently needed war materials, it seems probable that country will
supply her neeas from the large surplus wheat supplies of Canada and
elsewhere. In the past, wars have almost invariably been stimulating
to wheat prices but the feeling is growing that the reverse is true
this time.
Bankers are also greatly concerned as to how the 1941 wheat
crop will be handled. Virtually all available storage capacity is
now utilized by Government stocks. There is every indication now that
the crop will be a large one.
Many comments by bankers in the southeastern section of
Kansas and the western part of Missouri were heard regarding the improved situation in the coal mines. Railroads and chemical companies
contracted for coal with the result that operations have been much
steadier than usual, even though the winter has been a mild one. This
part of the District is also interested in recent lead and zinc developments, Oklahoma being the largest producer of zinc and Missouri
of lead. The very important part zinc is playing in the defense program has developed a critical situation and attention is already being
given to methods of minimizing competitive bidding and runaway prices
for this metal. A very different situation has existed in regard, to
lead as the war cut off markets of foreign producers and those dammedup foreign stocks have been overhanging the domestic lead market.
DALLAS
The demand for bank credit in the agricultural region in
the north central section of Texas is moderately heavier than it was
a year ago, which means that most of the banks have enough sound applications for credit to absorb practically all of their loanable
—8—
«
*
R—807—b
funds. As a result, earnings this year will be quite satisfactory in
most cases.
The livestock and oil-producing counties of West Texas are
semi-arid, but this winter has been exceptionally mild with considerably more than normal moisture, and the ranges are in first-class
shape. As a consequence, cattle are in excellent condition, and with
present high prices, the raisers are all in funds and have paid off
most of their bank indebtedness. Contracts are already being made
for spring calves at prices ranging from ten to thirteen cents a pound,
and cows with calves are bringing $75•
Sheep men also have prospered with wool from 35 to 38 cents
and top prices for lambs. Mohair brings 45 cents. Because of the
two-way profit, through increase and clip, cattle in this locality
are being rapidly replaced with sheep and goats.
"*
•
While oil activity was less last year than it was a few
years earlier, several new fields in the vicinity of Monahans have
been opened recently and considerable development is now in progress.
Some of this oil is a higher grade than in the older fields, but the
pool is from 7,000 to 9,000 feet below the surface, which makes drilling too expensive for independent operators, and the work is being
done by the larger companies.
All the banks visited are making good earnings and seemed
entirely satisfied with present conditions. However, apprehension is
felt concerning the outcome of the war, and it is the general opinion
that this country is going to have very bad conditions regardless of
who wins. Most of them think that England's chance of winning is not
particularly good.
SAN FRANCISCO
For some time past flax has been grown for fiber in the
Willamette Valley, Oregon. The amount grown is limited to the tonnage which present processing plants can handle. There are four such
plants and a movement is on foot to build a new one of 2,000 tons capacity. The projected plant is in a district which produces flax
fiber about 3 feet long, which is rated as the best flax fiber grown
in the United States. '
Because venture capital is timid, financing of the new plant
has bogged down. However, the people of the community proposing the
new plant are now going to approach the bank for cooperatives to see
«
150
R-807-b
-9-
if the setup can be made one which they can finance. The growing of
flax for fiber can be greatly increased in the future if a way is
found of building the processing plants.
It is interesting to note that when land is used for flax
growing there must be a rotation of crops for five years before it is
again ready to produce flax. Having been grown for several years
past, the crop is now well enough understood so that others will not
hesitate to go into it.
It is hoped that this activity can supply some of the shortages in fiber due to upset world trade conditions.
PUBLIC RELATIONS ACTIVITIES OF FEDERAL RESERVE BANKS
February 1941
F ederal
Reserve
Bank
Visits to Banks
Meetings Attended
Addresses Made
Member Nonmember 1 Total Number 1 Attendance Number Attendanc
Boston
New York
Philadelphia
Cleveland
24
62
38
23
3
35
27
11
27
97
65
34
3
7
7
4
1/
5,670
2,625
2,785
1
2
7
5
75
320
2,625
361
Richmond
Atlanta
Chicago
St. Louis
11
19
12
38
9
13
17
113
20
32
29
151
10
4
5
5
4,628
485
1,245
700
2
10
3
1
90
732
260
80
Minneapolis
Kansas City
Dallas
San Francisco
13
9
56
10
6
12
14
8
19
21
70
18
7
6
7
11
2,278
680
4,350
810
19
3
4
2
1,580
290
2,300
120
1/
Not reported.
158
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
11-803
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 22, I9J4I
CONFIDENTIAL
Dear Sir:
There is attached for your information a
copy of a memorandum (B-1253) prepared for the Board's
use summarizing the information furnished by the
Fedural Reserve Banks in response to letter
R~j66
January IX, 1941 covering the reserve position of
individual member banks during the week ended January 15, 19Ul'
This information has not been made
public by the Board.
Very truly your^f
o,
varpen^e:,
Assistant Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Enclosures with addressed copies only)
of
153
R-809
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 25# 19Ul
Dear Sir
There have been forwarded to you today under separate cover
the indicated number of copies of the following forms, a copy of each
of which is attached hereto, for the use of State bank members and
their affiliates in submitting reports as of the next call date:
Number of
copies
Form F.R. 105 (Call 86, Short form), Report of condition
of State bank member.
Form F.R# 105b (Revised August 1939)# Loans and advances to
affiliates and investments in and loans secured by obligations of affiliates.
Form F• R. 105e (Call 86), Publisher's copy of report of
condition of State bank member.
Form F. R. 220 (Revised August 1935)# Report of affiliate
or holding company affiliate*
Form F . R . 220a (Revised December 1938), Publisher's copy
of report of affiliate or holding company affiliate.
Form F. R. 220b (Revised February 1938), Instructions for
preparation of reports of affiliates and holding
company affiliates.
No change has been made since the last call for reports in
any of the forms listed above.
Enclosures 6
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Very truly yours,
Chester Morrill,
Secretary.
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154
BOARD OF G O V E R N O R S
R-810
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 25, I9I4I
Dear Sir z
There have been forwarded today to the Defense
Contract Officer at your Head Office 10 copies of a bulletin, "Financing Defense Plants and Facilities", prepared by Mr. Charles S, Garland, Financial Section, Defense Contract Service, Office of Production Management,
Five copies have been forwarded to the Defense
Contract Officer at each of your branches, if any.
Very truly yours,
A
Ernest li. Draper.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FEDERAL RESERVE DEFENSE CONTRACT OFFICERS
(Documents to Federal Reserve Defense Contract Officers only)
155
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
E-eii
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 25, 19^1
Dear Sir:
There is enclosed for your information a
copy of the Board's Functional Expense Exhibit for the
second half of I9U0# which has been compiled from the
semi-annual functional expense reports (Form E) received from the Federal Reserve Banks and branches.
Additional copies aro being forwarded under separate cover.
Very truly yours.
(O.
E. L. Smead, Chief#
Division of Bank Operations.
Enclosure.
9
TO THE CHAIRMEN AM) PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(Enclosures with addressed copies only)
156
BOARD OF GOVERNORS
R-812
OF THE
FEDERAL RESERVE SYSTEM
a
*
&
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 27# 19^1
Dear Sir:
There have been forwarded today to the Defense
Contract Officer at your Head Office five copies of a
supplemental listing, showing "Major Defense Contracts
Awarded by the War and Navy Departments during the Month
of February, 19Ul"»
Two copies have been forwarded to the Defense
Contract Officer at each of your branches, if any.
Ernest G, Draper
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FEDERAL RESERVE DEFENSE CONTRACT OFFICERS
(Documents to Federal Reserve Defense Contract Officers only)
15?
BOARD OF G O V E R N O R S
OF THE
FEDERAL RESERVE SYSTEM
R-813
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
March 28, 19^1
Dear Sirs
There is enclosed for your information# a copy of
a letter from the Honorable D. if. Bell, Undersecretary of
the Treasury, dated March 20, I9I4I, transmitting a copy of
a report dated March 6, 19Ul# by the Chief, Division of
Public Debt Accounts and Audit# of an audit of the completed
stocks of unissued Federal Reserve notes and Federal Reserve
bank notes charged to the Federal Reserve vault in the
Bureau of Engraving and Printing.
In his report, Mr. Loafman states that the amounts
of Federal Reserve notes and F e deral Reserve bank notes on
hand, $2,813,100,000 of 1928 Series and $2,947,500,000 of
I93U Series Federal Reserve notes and $4^0,800,000 of Federal
Reserve bank notes, were in agreement with the records of the
Federal Reserve Issue and Redemption Division of the Comptroller's Office. Copies of detailed statements "A", "B"
and M C" which accompany Mr. Loafman's letter are also enclosed.
Very truly yours,
(// c
J. R. Van Fossen, Assistant Chief,
Division of Bank Operations.
Enclosures
TO ALL
5
FEDERAL RESERVE AGENTS
158
R-813a
C O P Y
THE UNDER SECRETARY CF THE TREASURY
WASHINGTON
March 20# 19Ul
Mr. Chester Morrill#
Secretary#
Board of Governors of the
Federal Reserve System#
Washington# D. C.
Dear Mr. Morrill:
There is enclosed for your information a copy of a report
dated March 6# 19Ul# by the Chief# Division of Public Debt
Accounts and Audit# relative to the audit of the completed
stocks of unissued Federal Reserve notes and Federal Reserve
Bank notes charged to the Federal Reserve Vault in the Bureau
of Engraving.
Very truly yours,
(Signed) D. W. Bell
Under Secretary of the Treasury.
Enclosure
R-813b
C O P Y
March 6#19Ul
The Honorable
The Secretary of the Treasury.
Sir $
An audit has been made of the completed stocks of unissued Federal
Reserve notes and Federal Reserve Bank notes charged to the Federal Reserve
Vault in the Bureau of Engraving and Printing#
The audit was begun
February 17 and completed February 18, 19^4-1# as of the close of business
February llj.# 19Ul»
The following tabulation reflects the amounts as disclosed by the
audit:
Under auditor's seal in V a ult No# 1# Treasury Building:
Federal Reserve notes (Series 1928)
i....... $2#813#100#000
Federal Reserve Bank notes (Series 1929)
1+50#800,000
3,263,900,060
On hand in Federal Reserve Vault, Bureau of
Engraving and Printing:
Federal Reserve notes (Series 193U)
Total
2,9U?#500,000
$6,211,^00,000
The above balance, comprising 87#20U packages, was in agreement
with the records of the Federal Reserve Vault and those of the Division of
Public Debt Accounts and Audit and with the statement submitted by the
Federal Reserve Issue and Redemption Division of the Office of the Comptroller of the Currency#
Detailed information with respect to each of
the classes of currency is reflected in the attached statements, "A"# "B"#
and "C"# respectively.
159
160
-2-
R-813b
The entire balance of Federal Reserve notes (Series 1928) and
Federal Reserve Bank notes (Series 1929) have been under the auditor's seal
since 1937 &t which time they were package counted and the seals inspected
and no further inspection was made in connection with this audit except to
inspect the seal on the compartment in Vault No# 1#
The entire stock of Federal Reserve notes (Series 193U) consists
of sealed packages bearing the seal of the Bureau of Engraving and Printing
and is under the joint custody of representatives of the Secretary of the
Treasury and the Bureau of Engraving and Printing#
It was, therefore, not
considered necessary to break the seals on the packages in making the
verification but the brief on o&ch package was examined with respect to the
package number, serial numbers of the notes, bank, and denomination#
The
packages were found in orderly arrangement and grouped in such manner as to
permit the auditors to accomplish the verification without delay.
Prior to beginning the audit, the Chief of the Secret Service was
notified and a representative of his office was present on February YJ and
18, 1941.
Appreciation is extended to the officials of the Bureau of
Engraving and Printing and the representatives at the Federal Reserve Vault
for the cooperation and assistance rendered during the conduct of the audit.
Respectfully submitted:
(Signed) M. R. Loafman#
Chief, Division of Public Debt Accounts and Audit
STATEMENT "A"
R-813c
FEDERAL RESERVE NOTES (SERIES 1928) ON HAND B THE FEDERAL RESERVE VAULT
IN THE BUREAU OF ENGRAVING AND PRINTING. * AS DISCLOSED BY AUDIT
AS OF FEBRUARY 14, 1941
(IN THOUSANDS OF DOLORS)
5's
BANK
$ 47,880
10's
$
20's
50's
100's
500*s
1,000's
$46,560
$ 50,400
$ 50,400
$ 30,000
$ 30,000
25,200
30,000
87,600
64,800
54,400
5,000* s
$ 2,000
10,000*s
$«•••••
TOTAL
$
257,240
New York ......
87,560
Philadelphia...
36,780
15,160
50,320
75,000
78,000
42,000
50,400
Cleveland .....
37,040
19,120
107,440
41,400
28,400
39,300
31,600
6,000
Richmond
22,340
• • • * • #
41,600
27,200
28,500
21,000
9,000
10,000
159,640
36,720
23,200
20,000
19,600
16,400
4,000
9,320
145,520
114,000
88,200
96,800
108,900
135,200
16,000
20,000
644,380
8,480
19,200
24,800
18,400
16,200
34,080
12,000
22,400
13,300
13,000
•••••«
104,160
26,720
22,600
26,000
25,500
23,600
#*#»#»
152,060
22,640
22,600
20,000
24,600
23,400
1,000
2,000
133,240
12,260
13,440
11,800
26,400
21,600
17,200
3,720
9,840
116,260
$358,480
$55,240 $485,600
$438,000
$508,000
$436,500
$432,400
$41,720
$57,160
$2,813,100
6,760
9,520
65,280
St. Louis .....
Minneapolis ...
7,180
Kansas City ...
27,640
7,760
San Francisco .
TOTAL
2,200
9,240
......
6,000
355,560
347,660
310,300
87,080
*These notes are in Vault No. 1, Main Treasure Building, under auditor*s seal.
^
v4
BANK
STATEMENT "3"
R-813d
FEDERAL RESERVE NOTES (SERIES 1934) ON H M D II! THE FEDERAL RESERVE VAULT
II? THE BUREAU OF ENGRAVER AND PRINTING, AS DISCLOSED BY AUDIT
AS OF FEBRUARY 14, 1941
(IN THOUSANDS OF DOLLARS)
5*s
10* s
20* s
50's
100's
500*s
l,000*s
5,000*s
10,000* s
Total
$ 25,200
$ 77,640
$ 49,120
$ 16,600
$ 42,400
$ 10,000
$ 10,200
$12,000
$14,000
29,980
192,120
103,040
70,800
199,200
39,600
26,600
11,000
26,000
698,340
27,600
54,840
60,560
38,600
42,800
3,200
1,800
3,000
6,000
238,400
11,000
45,960
80,160
31,000
17,600
1,100
7,200
4,000
8,000
206,020
16,960
9,000
46,160
18,200
21,600
7,700
2,400
5,000
• •••#
127,020
Atlanta
8,260
4,360
16,240
4,000
16,000
5,700
4,600
5,000
4,000
68,160
Chicago
36,660
164,360
206,640
63,200
123,200
16,200
40,400
6,000
6,000
662,660
33,1A)
22,280
29,840
7,600
27,200
4,600
2,800
4,000
2,000
133,460
Llinneapolis ...»
19,600
40,400
48,480
3,000
11,600
2,700
800
Kansas City ....
11,380
27,120
40,880
5,600
22,000
1,900
6,600
6,000
4,000
125,480
4,000
11,720
11,280
800
8,800
6,600
5,200
5,000
4,000
57,400
36,920
39,800
73,600
11,000
34,400
10,500
15,600
11,000
14,000
246,820
$260,700
$689,600
$766,000
$270,400
$566,800
$109,800
$124,200
$72,000
$88,000
$2,947,500
Philadelphia ...
Richmond .......
San Francisco ..
TOTAL
$
257,160
126,580
* • • • #
R-ei3e
3
STATB/BPT "C"
FEDERAL RESERVE BANK NOTES (SERIES 1929) ON HAND IN TFE FEDERAL IS SERVE VAULT
IN THE BUREAU OF LNOE.' I'" ; * B PRINTING,* AS DISCLOSED BY AUDIT
AS~OF~FEBRUARY lU, 1941 ~
(IN THOUSANDS OF DCLLARSj
:
BANK
5'S
Boston
New York
Philadelphia .....
20's
50's
100's
TOTAL
$5,020
5#000
$5*04-0
$«...•
$•••»•
«?!;?, 060
860
27,320
18,000
6,600
22,800
75,580
It-, 100
Cleveland
Richmond
IO'S
3,800
13>840
.....
.....
21,7^0
10,020
10,080
1,520
23,800
23,600
69,020
..............
.....
10,82tO
21,600
.....
15,GOO
48,0/40
.
5>0l|0
5,880
15,520
.....
19,380
23,1)240
24,720
15,000
2,120
5,040
Atlanta
Chicago
St. Louis
26,kho
10,800
93,340
7,160
Minneapolis
...........
.....
1,880
11,280
o,600
14,2+00
3^4,160
Kansas City
...........
9,020
2,8li0
7,120
12,800
8,2400
ljX)»l80
Dallas .................
.....
.....
1,680
1,200
1,200
I4,080
11,200
.....
16,000
$77,200
$96,800
$2450,800
San Francisco
TOTAL
hi 800
$53,24240
$98,000
$125,360
*These notes are in Vault No. 1, Main Treasury Building, under
auditorTs seal.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
R-8ili
164
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
April 3, I9J4I.
Dear Sir:
There has been forwarded today to the Defense Contract Officer at your Head Office and each branch, if any, one
copy of the restricted Army and Navy Munitions Board "Alphabetical
Directory of Industrial Facilities, I9I+I".
This Directory was referred to by Mr. Robert L. Mehornay
at the meeting of the Presidents of the Federal Reserve Banks with
representatives of the Board of Governors and the Defense Contract
Service on February 7» 19Ul*
Very truly yourj?,
Ernest G. Draper.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
COPY TO FEDERAL RESERVE DEFENSE CONTRACT OFFICERS
(Document to Federal Reserve Defense Contract Officers only)
BOARD OF G O V E R N O R S
OF THE
R-815
FEDERAL RESERVE SYSTEM
165
WASHINGTON
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
April J, 19Ul
Dear Sir:
It has been brought to our attention that the
cost per unit of handling City Collection items at the
Little Rock Branch, as shown on page 95 of the Board's
functional expense
exhibit for the second half of I9U0,
should be 3»7 cents instead of 37 • 1 cents.
It will be
appreciated if you will have this correction made in the
copies of the functional expense exhibit forwarded to
your Bank.
Very truly yours,
E. L. Smsad, Chief,
Division of Bank Operations
TO THE CHAIRMEN /ED PRESIDENTS OF
RESERVE BANKS, EXCEPT ST. IjOUIS
LL FEDERAL
x
BOARD OF GOVERNORS
166
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-816
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
April 7, 19U1
Dear Sir:
Referring to the Board's letter R-7&5 of January
11, I9I1.I, the following changes took place during March
in the list of nonmember banks that have in force agreements with the Board pursuant to the provisions of Section
8(a) of the Securities Exchange Act of 193U*
Deletions
Mew York
Auburn
Mew York City
Auburn Trust Company
(Admitted to Federal Reserve
membership on March 22, 19Ul)
Heidelbach, Ickelheimer & Co.
(Absorbed by The Commercial
National Bank and Trust
Company, Mew York City, on
March lU, 19Ul)
Very truly yours,
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE B A M S .
167
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-817
A D D R E S S OFFICIAL C O R R E S P O N D E N C E
TO THE BOARD
April 8, 1941
Dear Sir:
There is enclosed for your information a copy of a letter, dated March 24, 1941,
to Mr. J. S. Sinclair, Chairman, Conference of
Presidents, regarding the methods used by the
Federal Reserve Banks in calculating overtime
payments for employees subject to the provisions of the Fair Labor Standards Act of 1938.
Very truly yours,
L. P. Bethea,
Assistant Secretary
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-817-a
March 24, 1941
Mr. J. S. Sinclair, Chairman,
Conference of Presidents,
Federal Reserve Bank of Philadelphia,
Philadelphia, Pennsylvania.
Dear Mr. Sinclair:
We wish to bring to your attention the matter of the methods used by the Federal Reserve Banks in calculating overtime payments
for employees subject to the provisions of the Fair Labor Standards
Act of 1938.
As you know, the methods now being employed by the Federal
Reserve Banks for this purpose are not uniform. The Board is advised
that at six of the banks at least the method used in calculating overtime payments is based upon the assumption that the employee works a
regular number of hours and accordingly the payment is at a fixed
hourly rate based on the employee's salary. Although the Board's information as to the operation of this method is not specific, it is
understood that in such cases, where the regular number of hours worked
is 40, for example, the hourly rate is determined by dividing the weekly salary by 40, and one and one-half times the hourly rate thus arrived at is paid for each hour of overtime. At another Federal Reserve
Bank, however, in accordance with Interpretative Bulletin No. 4 of the
Wage and Hour Division of the Department of Labor with regard to the
calculation of overtime where there is a variable workweek, the hourly
rate is computed by dividing the weekly wage by the total number of
hours worked during the week. One Federal Reserve Bank determines the
hourly rate by dividing the weekly wage by 40, even though the number
of hours actually worked exceeds 40, and one-half of the resulting sum
is paid for each hour of overtime. It is obvious that the last two
methods described are less favorable to the employees than the one first
mentioned above.
You will recall that this matter was considered at the Presidents' Conference held on September 27-28, 1940. The tentative draft
of the minutes of the meeting indicated that the Conference was of the
opinion that all Federal Reserve Banks should have a uniform basis for
determining the rate at which overtime payments are made, that a ruling as to the use of a "variable workweek" basis by the Federal Reserve
Banks should be obtained from the office of the Administrator of the
Wage and Hour Division, and that all Federal Reserve Banks should be
guided by such ruling. Under date of October 24, 1940, however, the
169
—2—
R-817-a
Chairman of the Conference of Presidents addressed a letter to all
other Reserve Bank Presidents with regard to this matter, in which he
indicated the improbability of obtaining a ruling more favorable than
that already in effect, and stated, among other things, that several
of the banks had questioned the desirability of a uniform policy in
respect to the matter and that it seemed preferable not to ask for a
ruling that might impel uniformity. As a result of a suggestion in
this letter, it was apparently agreed by the Presidents to change the
minutes of the meeting so as to state an understanding that copies of
a ruling of the New York Regional Director of the Wage and Hour Division on this subject would be sent to the members of the Conference so
that each bank might determine whether or not it would use a variable
workweek as the basis for computing overtime payments under the Fair
Labor Standards Act of 1933.
In all the circumstances it is felt that the subject is one
which deserves further consideration by the President's Conference,
and it is suggested that on the occasion of the next meeting of the
Conference it include on the agenda as one of the topics for consideration the desirability of a uniform practice with respect to the
computation of overtime by the Federal Reserve Banks under the Fair
Labor Standards Act of 1933, together with such other problems, if
any, as may have arisen under the Act and appear to warrant consideration by the Conference.
Very truly yours,
(Signed)
Chester Morrill
Chester Morrill,
Secretary.
1?0
BOARD OF GOVERNORS
R-818
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DF"F'ICIAL CDRRESPDNDENCE
TD THE BDARD
April 9, 1941
Dear Sir:
There has been fonvarded today to the Defense
Contract Officer at your Head Office and branches, if any,
a letter, dated 1'larch 21,1941, addressed "To All Producers,
Fabricators, an.d Recondary Smelters of Aluminum" by l'.r.
E. R. Stettinius, Jr.; Director of Priorities, Office of
Production Management.
Attached to this letter is a CO"Y of General
Preference Order M-1~ Preference Rating Schedule (Supplementary Order M-i-a), and a ~'orrr, to bo used in reporting
schedule of shipments of aluminum.
There also has been forwarded to the Defense
Contract O~fieers a sample copy of tho report form which
has been furnished all producers, fabricators, and secondary smelters of aluminum, to be filed by all customers
requesting aluminum for delivery after April 10.
Very truly yours,
,./.
~J·J~
Ernest G. Draper.
TO THE PRBSIDENTS OF ALL FEDERAL RES"RVE Bll.l\1KS
COPY TO FEDERAL RES~RVB DEFENSE CONTRACT 0FFICBRS
(Documents to Federal Reserve Defense Contract Officers only)
1.?.1
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-819
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
April 15, 1941
Dear Sir:
The Board of Governors of the Federal
Reserve System is advised that beginning Monday,
April 28, and ending Saturday, September 27, the·
following Federal Reserve Banks and branches will
operate under daylight saving time.
Boston
New York
Buffalo
Philadelphia
Pittsburgh ·
Chicago
Please notify branches.
Ver,r truly yours,
F. A. Nelsbn,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-820
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TD THE BDARD
April 15, 1941
Dear Sir:
There is enclosed a copy of a letter, dated April 7, 1941, which the Board has
received from the Treasury Department, transmitting a cop,r of Report No. 230 of the House
of Representatives, dated March 11, 1941, with
respect to the destruction of certain Fiscal
Agenqy records, and a form for reporting to
the Treasury Archivist the disposition made
of the records on the list.
~~ questions regarding the disposition of the useless records should be taken
up with the Treasur~ Department.
Secretar-.v.
Enclosures
(House of Representatives Report sent. only
with addressed copies.)
TO THE
PRESIDEl~TS
OF ALL FEDERAL RESERVE BANKS
R-820-a
1?3
TREASURY DEPARTwlliNT
Washington
April 7, 1941
AUTHORIZATION FOR THE DISPOSITION
OF USELESS RECORDS
TO
Board of Governors of the
Federal Reserve System
Attention:
Division of Bank Operations
Pursuant to the terms of the act of August 5, 1939, concerning the disposition of certain records of the United States Government,
permission has been granted in House Report No. 230, 77th Congress,
1st Session, dated March 11, 1941, for the disposition of the records
described in the following list of useless papers:
Federal Reserve Banks as Fiscal Agents October 10, 1940.
Under the terms of section 5 of the act of August 5, 1939,
disposition m~ be made b,y one of the following methods:
{a)
(b)
(c)
B,y sale, upon the best obtainable terms after
due publication of notice inviting proposals
therefor;
ay causing them to be destroyed;
By transfer (without cost to the United States
Government) to any State or dependency of the
United States of America or to any appropriate
educational institution, library, museum, historical, research, or patriotic organization
therein, that has made application ~H''* therefor, through the Archivist of the United
States.
You are hereb,y instructed to dispose of the records described in the list referred to above, by one of' the methods indicated in the preceding paragraph. Records containing confidential
information should not be disposed of ~~ sale as waste paper unless
their character as records has been destroyed, nor should they be
transferred to another institution without the consent of the Administrative Assistant to the Secretar.y.
-2-
R-820-a
If records are to be transferred to another institution )1J.rsuant to an application received through the Archivist of the United
States, arrangements for such transfer should be made through the
Treasury Archivist.
If records are to be sold, a separate account should be kept
of the cost of the sale and the amount of the purchase price received,
and the moneys derived from the sale shvuld be paid into the Treasury
of the United States.
A report of the disposition of.' the records on the list indicated above should be made on the attached form in duplicate, and
should be submitted to the Treasury Archivist not later than JtL.'1e l,
1941.
(Signed) C. R. Schoeneman
Acting Administrative Assistant
to the Secretary
114
........
R-820-b
__ RECORDS
REPORT OF THE DISPOSITION OF USELESS
,._
.
To the Treasury Archi,rist:
The records described in the follm-:ing list:
Federal Reser·ve Banks as Fiscal Agents October 10, 1940
approved for disposition by authority of House Report No. 230, 77th
Congress, lst Session, dated March 11, 1941, have been disposed of
by the following method (except as indicated under the item "Remarks"
below):
__ By sale:
Cost of sale:
Purchase Price:
__ By destruction:
__ By transfer to
(Indicate rranner of destruction)
--------------~----------------~-----------(name of institution)
(post-office address)
Date of disposition:
Remarks:
Field Office Form
1?5
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-821
WASHINGTON
ADDRESS OF'F'ICIAL CORRESPONDENCE
TO THE BOARD
April 17, 1941
Dear Sir:
There is attached a copy of the report of expenses of the n~in lines of the Federal Reserve Leased Wire System for the month
of March 1941.
Please credit the runount payable by
your Bank to the Board, as shown in the last
column of the statement, to the Federal Reserve
Bank of Richmond in your daily statement of
credits through the Interdistrict Settlement
Fund for the account of the Board of Governors
of the Federal Reserve System, and advise the
Federal Reserve Banlc of Richmond by mail the
amount and purpose of the credit.
Very truly yours,
~~Udi/
O. E. Foulk,
Fiscal Agent.
Enclosure
TO PRESIDENTS OF
ALL
FEDERAL RESERVE BANKS
EXCEPT RICHMOND
117
R-821-a
REPORT OF EXPENSES OF MAIN LINES OF FEDERAL RESERVE
LEASED VV~RE SYSTEM FOR THE MONTH OF MARCH 1941
Words Sent
Total
by N.Y.
Words
Chargeable
to Other ChargeF.R. Banks able
Pro Rata
Share of
Total Expenses (l)
Expenses
Paid
by Banks
and
Board (2)
Federal
Reserve
Bank
Number
of Words
Sent
Boston
New York
Philadelphia
Cleveland
31,870
87,795
23,748
41,513
472
472
32,340
87,795
24,220
lt-1, 985
Richmond
Atlanta
Chicago
St. Louis
45,393
46,537
77,579
49,109
470
470
515
470
45,863
4-7,007
78,094
49,579
729.35
747.54
1,241.90
788.44
330.49
239.66
1,332.62
275.91
Minneapolis
Kansas City
Dallas
San Francisco
23,522
44,392
37,934
54,198
470
470
536
472
2.3,992
44,862
38,470
54,670
381.54
713.43
611.78
869.40
185.06
273.01
330.03
427.13
411,561
6,544 .. 93
10,503.25
980,438
$15,591.61
Board of
Governors
411,561
Total
975,151
470
5,287
$
514.29
1,396.18
385.16
667.67
$
Payable
to
Board
of Governors
315.18 $ 199.11
519.18
877 .oo
250.57
134.59
251.70
415.97
398.86
507.88
90. 72(a)
512.53
196.48
440.42
281.75
442.27
$15,591.61 $4,049.04
20!12(a)
$3,958.32
(l)
Based on cost per word ($.015902698) for business handled during the month.
(2)
Payments by Banks are for personal services and supplies and p~ments by
Board are for personal services and supplies ($1,157.98) and wire rental
($9, 768.67) less amount ($423.40) representing rei1abursement for the cost
of sending messages between the Washington office of the Leased Wire System
and the local telegraph offices of the Treasury, Reconstruction Finance Corporation, and the Commodity Credit Corporation. Personal services include
salaries of main line operators and of clerical help engaged in work on main
line business, such as counting the number of words in messages; also overtime and supper money and Retirement System contributions at the current
service rate.
(a)
Credit--Reimbursable to Chicago.
118
P.-822
BOARD OF GOVERNORS
OF THE
FEDERAL HESERVE SYSTEM
STATEMENT FOR THE PRESS
The following summary of general
business and finandal conditions
in the United States, OO.sed upon
statistics for March and the first
half of April, wi.ll appear in the
May i3sue of the Federal Reserve
Bulleti.n and in the monthly revie-ifS of the Federal Reserve Banks.
For release in morning papers,
Saturday, April 19, 1941
Industrial activity increased further in March but declined
somewhat in the first hal£' of April o1·ring to temporary reductions in
output of bituminous coal and automobiles.
Wholesale prices of me.ny
corrunodities advanced considerably and the Government took steps to
limit price advances of some additiom:J.l industrial materials.
Production
V)lume of industrial output continued to increase in March
and the Board's seasonally adjusted index rose from 1hl to 143 per
cent of the 1935-39 average.
Activity increased further in most dur-
able goods industries, particularly in those producing na-::hinery, aircraft, ships, and armarnent.
Steel production increased to about 100
per cent of rated capacity.
Automobile production, v;hich usually increases considerably
in lJiarch, showed little change front tLe bigr1 rat•:: re11c;hed in Februa.ry.
In the first half of April output
·Nas
reducecl considerably owing to a
shutdovm at plants of the Ford Motor Company during an industrial dispute which was settled about the middle of the month.
lietail sales of
R-822
-2-
new and used cars advanced to new peak levels in March and dealer's
stocks at the beginning of April amounted to about a month's
at the current rate of sales.
tained at
unusual~
supp~
Output of lumber, which had been sus-
high levels during the winter months, rose less
than seasonally.
Activity in the textile and shoe industries increased further in March.
Cotton consumption rose to a record level of
bales and there was also an increase in rayon deliveries.
textile mills activity was sustained at the
p~ak
854,000
At wool
rate rE;lached in Feb-
ruarJ, not showing the usual large seasonal decline, and in the chemical and rubber industries further advances were reported.
Bituminous coal production rose considerably, while output
of crude petroleum was maintained in March at about the rate that had
prevailed in the four preceding months.
In the first half of April
coal production declined sharply, however, as most mines were- closed
pending conclusion of contract negotiations between mine operators
and the miners' unidh.
Production of nonferrous metals continued in
large volume in March and deliveries of refined copper showed a sharp
rise as domestic production was supplemented by supplies received from
South America.
Construction contract awards rose sharply in.March and were
larger than in any month since the middle of' 1930, according to the
F. W. Dodge Corporation data.
The rise was chiefly in awards f6r pub-
licly-fina..'1Ced work, v,;hich had been reduced considerably in January
and February, and in privo.te nonrestdentiR.l projects, 'particularly
1?9
1.80
H-822
-3factory construction.
Awards for private residential building, which
had been unusually large during the winter months, showed less t-han
the customary seasonal rise in lvlarch.
Distribution
In March distribution of conanodities to consumers was sustained at the high level reached in February.
Sales at mail-order
houses and department stores increased sea.sonally and variety store
sales showed more than the usual seasonal rise.
Freight-car loadings increased by about the usual seasonal
amount.
Loadings of coal and grain rose considerably, while ship-
ments of miscellaneous freight, which in previous months had risen
steadily, on a seasonally adjusted basis, showed a smaller increase
than is usual at this t.ime of year.
Commodi.ty prices
Prices of basic commodities continued to advance sharply
from the middle of March to the middle of April.
There .were substan-
tial increases in prices of domestic foodstuffs and further advances
in burlap, cotton, ru'ober, and lead.
Increases nere also reportGd in
wholesale prices of a number of manufactured products
~md
the general
index of the Bureau of Labor Statistics rose two points to 83 per cent
of the 1926 average.
Informal action was taken by the Government to discourage
price increases of some additional industrial materials and maximum
price schedules were established for steel, bituminous coal, secondary and scrap aluminum and zinc, and iron and steel scrap.
Sharp
181
R-822
-4-
reductions in prices of some kinds of nonferrous metal scrap resulted.
Announcement of an expanded Federal purchase program for hog, dairy,
and poultry products was follo-Hed by pr:ice increases for these and related products.
Bank credit
'I'otal loans and investments at reporting member banks in 101
cities increased during March and the first two weeks of April.
mercial loans continued to rise
sub~1tantially,
Com-
and holdings of United
States Government securities increased further, reflecting purchases
of new Treasury offerings.
United States Government security prices
Prices of United States Government securities declined irr'egularly from March 15 to April 9 but subsequently rose sliuhtly.
The 1960-65 bonds showed a net loss of about
3/!_.
of l point on AprLi
15, following a rise of about 3-l/L, points in the previous month.
The
yield on this issue on April 15 rras 2.14 per cent, compared with 2.0:?
per cent at the all-tLte peak in prices on Decer.tber 10, and 2.30 per
cent at the recent low in prices on Februa!"J 15.
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-823
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TD THE SDARD
April 18, 194l
Dear Sir:
On Friday, May 30, the offices of the
Board of Governors and all of the Federal Reserve
Banks and branches, except Atlanta, Birmingham
and Jacksonville, vdll be closed. There will be
neither transit nor Federal Reserve note clearing,
and the books of the Board's Interdistrict Settlement Fund will be closed on that day.
The Board is advised that the Charlotte
Branch of the Federal Reserve Bank of Richmond
will be closed on Saturd~, May 10, in observance
of Confederate Memorial Day, and on Tuesday, May
20, in observance of Mecklenburg Independence Day.
Please notifY branches.
Ver,y truly yours,
~?zL~&-~-·~-z-//
F. A. Nelson,
Assistant Secretar,y.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
183
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-824
WASHINGTON
ADDRESS OF"F"ICIAL. CORRESPONDENCE
TO THE BOARD
April 24, 1941
Dear Sir:
Under date of April 18 the Board sent you,
with its letter, S-259, a copy of a letter received
from Mr. Wm. S. Knudsen, Director General of the
Office of Production Management, ~1th respect to reimbursing the Federal Reserve Banks for expenses incurred in the offices of District Coordinators.
It will be appreciated if you will forward
to the Board the necessary changes in your Personnel
Classification Plan to provide for employees in the
office of District Coordinator and in the office of
the Federal Reserve Defense Contract Officer at your
Bank and at your branches, if any. You were advised
in our letter of April 18 that expenses of the District
Coordinators and the Defense Contract Officers should
be reported in separate units in the Functional Expense Reports. The necessary revisions in the Functional Expense form are being made and copies of the
:revised pages will be forwarded shortily.
Very truly yours,
~hl~
Chester Morrill,
Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE B..A1JKS
184
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-825
WASHINGTON
ADDRESS DF"F"ICIAL CDRREBPDNDENCE
TD THE BDARD
April 26, 1941
Dear Sir:
There is enclosed for your information
a table sho\7ing, among other things, the number
and aggregate deposits of State banks admitted
to membership in the Federal Reserve System during 1940 and the first quarter of 1941, together
with a statement containing excerpts from the
bank relations reports submitted ty the Federal
Reserve Ba...rllcs for the month of March.
~·
-
---~;;~;:~
L. P. Bethea,
Assistant Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-825-a
STATE BANKS ADMITTED TO FEDERAL RESERVE M.Er.IDERSHIP
Federal
Reserve
District
Boston
New York
Philadelphia
Cleveland
R.ichmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total
-l:-
iP~
Banks admitted
to
membership during
Jan - March 1941
Number Deposits
(Denosits are in thousands of dollars)
Number of nonmember commercial banks with sufficient
Banks admitted
capital stock to meet the rrQnimum statutory
to membership
reguir~~ents
for Federal Reserve membershi~~
.
during 1940
By size of de ::lositsNumber
Total
$10
Under
$1
millions
on Par
Number
10
$1
Number Depos~ts
.;u(.
over
million
millions
and
List
'"
;
!
4
0
12,026
3,777
141
224
225
45
76
101
87
126
108
8
21
13
141
224
225
1,200
1,100
700
25
18
3
I
37,595
21,868
5,298
475
394
484
327
301
415
139
86
65
6
7
474
232
52
0
14,100
1,800
0
62
21
9
74,483
II 12,412
10,382
1,219
664
420
1,008
578
391
200
78
27
10
3
0
0
2
2
0
1,100
800
10
24
4
14,197
21,154
5,125
487
282
194
459
253
138
28
29
37
0
0
9
50
62,100
218,317
5,209
4,092
1,010
79
0
18
2
38,500
0
8
2,800
4
3
l
14
4
0
I
~-~i--~188
t
2
1,079
434
l
I
78
402
174
182
3,697
These figures are as of December 31, 1939, the latest date for which such data have been compiled.
These totals include, and the distribution by amount of deposits excludes, 28 banks with no deposits or for
vmich deposit figures were not available.
Excludes two banks organized to succeed national banks, one organized to succeed a State member as part of
a rehabilitation progrwm, and one organized to succeed a State member whose charter had expired.
R-825-b
April 26, 1941
Not for Publication
EXCEHPTS FROIV! BANK RELATIONS REPORTS
FOR THE MONTH OF MAr"'lCH 1941
BOSTON
So'J.lthern New Hampshire
Lending rates were unchanged, few loans being made for
less than 6 per cent. The onzy general complaint heard was the inability to employ a greater amount of bank funds.
Two of the bankers Yisited referred briefly to the branch
banking bill .{lOW before the New Hampshire Legislature and 1ntimated
that the bill was not supported generall~r b<J the ma.jori ty of the
bankers in the State.
NE'I'V YORK
During the month of I'llarch six State institutions completed
membership--a total of eighteen new banks since .January l--and four
apvlications were re(!eived.
The Eastern Regional Conference on Savings and Conunercial
Banldng sponsored by the American Bankers Association was held at
the Waldorf-Astoria Hotel, New York City, March 5 to 7, with a registration of approximately 1,150. The theme of the conference was
"Improved Bwldng Service Through Effective Cooperation". Emphasis
was placed on the pEnel type of discussion and the principal topics
on tho program wer;l defense loans, agricnl tural and consumer credit,
current oconomie developments, public relations, and savings bank
life insurance;.
PHILADELPHIA
Southeastern New Jersey
The resort business last season was not good but, because
of business nctivi"tif nnd the curtailment of ocean cruises, indications are that 1941 will be a banne~· year if weather conditions are
favorable.
186
-2-
R-825-b
Several bankers of Trenton, the St.:J.te capital, complained that trieir city has not as yet felt the upswing from defense work as compared with most other industrial cities, pointing
out the fact that, with the exception of an $8,000,000 defense
contract recently awarded to John A. fioebling' s Sons Company,
Government contracts thus far have been small in amou.."lt. Other
industries, particularly those located in the Camden area, are
busy and the Now York Shipbuilding Corporation, l'rhich is employing about 11,000 men, was reported to have unfilled orders
on hand sufficient to maintain steady operating schedules for a
period of about f'i ve years.
Conditions in the farming sections show little change
as compared with a year ego. OntS banker reported that, bec,.-'. use
o.f poor crop yields and low prices l2st see,son, many of the· farmers indebted to this bcmk were unatJle to reduce their obligations last fall, with the result that the volume of f:1rm loans
carried over from the 1940 sea. son wo.s t;r:re:::oter the:.n thctt in either
1938 or 1939. Poult.ry raising is growing in importance ilS a
source of farm income because of the satisfD.ctorJ returns for
poultry and poultry products.
CLEVELAND
Such comment as has been offered by bankers visited
during the month with respect to the five-point progr<::un of the
Board has been in support of the Board's position. As one banl-::er expressed it, "any necessary steps, no matter how drastic,
should be taken to pr·<Jvent inflation". Another banker expressed
his belief that the experience gained by bankers following the
first World "vVar will prevE;nt their maldng the same mistal(es if
inflationary tendencies again develop. On the other hand two
bankers interviewed during the month are concernt-d over the effect of an increase in required re.scrvo on the bond. mark8t.
RlCRvlOND
The majority of textile mills in the Fifth Federal
Reserve District are operating near capacity-, wHh three shifts
of five days per week, and many mills are operating on Saturdays. Plant additions are under way at a number of mills, and
further extensions are likely if the present scale o..f operation
continues for a considerable p<;)!'iod. Wage increases, v.::.rying
from 5 to 7-1/2 per cent, vn~re fairly nu..•nerous among the mills
-3of the
R-825-b
March. Empl~Jment outlets offered ~ defense
are expected to create a serious shortage of farm labor in
mll.l'lY parts of the Carolinas, particularly during the harvest seasons
for potatoes and strawberries.
csu~olinas L~
proj~cts
Mar,yland
A contract was awarded to the Bethlehem-Fairfield Shipyard
at Baltimore, in March, for 50 of the Maritime Commission's order of
137 cargo vessels. Bethlehem's award was given as $75,000,000, base
cost figure, and calls for delivery of the first ship in 305 days and
the fiftieth in 730 days.
In trying to bring new sources of employment to Crunbridge,
Maryland, the Chamber of Commerce of that cit,y has acquired all the
capital stock in a hosiery mill that formerly was in operation there.
Virginia
The Clinchfield Coal Corporation, which operates non-union
collieries at Clincho and Dante, Virginia, announced a wage increase
of 10 per cent for all employees. These mines are still operating
full time whilo union mines are shut dovm.
Farmers around New Market, in Shenandoah County, Virginia,
are expected to increase their cattle herds ~~ about 20 per cent this
fall in the belief that the price of beef woulcl r'ise as a result of
national defense 3timulus to business.
West Virginia
Production of coal jn West Virginia during March is estimated to have been 12,000,000 tons, or an amount greatly in excess of
the normal for that month.
North Carolina
The North Carolina Shipbuilding Company of Wilmington received a contract in March for 25 cargo ships at an estimated base
cost of ~37,500,000. Construction is in progress on a six-way shipyard to cost $5,140,000, in which yal~d the above ships will be
constructed.
South Carolina
The growing of a new crop, from which paprika will be produced, is being undertaken in Dillon County. Two hundred acres are
being planted this year, with 1,000 acres expected next year. A mill
1~8
-4-
R-825-b
for grind:ing paprika is also being constructed. ·rhis is just one more
instance of the crop diversification ta~ing place in South Carolina.
Thirty-four contracts fo;r· construction and equipment, amounting altogether to $25,500,000, have been awarded by the South Carolina
Public Service Authority for work on the huge Santee-Cooper nydroelectric project. The proposed total outlay on this project is
$43,000,000.
ATLANTA
Work is prcgressing on a project ·,vhich rJill make Pearl River
entirely navigable from Bogalusa (eastern border of Louisiana) to the
Gulf, thereqy providing a means of low rate water transportation for
bringing raw materials to and shipping of the finished products from
the industries of this immediate area. It is expected, however, that
from one to two years will be required for the completion of thi2
pro,iect.
CHICAGO
A banker in Detroit informs us that it will be necessary to
import a great deal of labor in that area, for it is estimated that by
July 1 there will be 100,000 more jobs than men to fill them.
since
Automobile production for the month of Maret: was the highest
1929.
r.~arch
Some steel companies are out of the market for the remainder
of the year. One company has ·written to all of its customers that it
is accepting only su.ch orders as con be included in the 191~1 schedules
a.'1d those only in relation to previous sales; no orders for 1942 delivery will be accepted at present except defense it0ms.
ST. LOUIS
In the section of Indiana visited agricultural conditions last
season wm:e mHinly favorable. Tobacco did. not turn out as well as expected owing td.reduced yields, inferior quality, and low prices toward
the end of the marketing season. However, this disadvantage was offset
by success of other crops and b'.f substantial revenues derived from livestock production and Government benefit payments. Tho numbers of cattle,
it was stated, ure increasing, and in some sections are half again as
large as t\ year ago. Farm help is repvrted scarce.
-5-
R-f325-b
:190
Aside from tobncco, on which prices were very disappointj_ng, the area in Kentucky visited also had a favorab.le agricultural
season in 1940. Livestock raising has been increa.sin&; steadily in
recent years, and dairying is extensively practiced and profitable.
Outlook for wheat and other fall sown grains at mid-March was unusually good, and the same is true of tree fruits.
At Charlestown (Indiana.) is located one of the largest
powder plants in the United States, operated by the DuPont Company.
In that and adjacent conununities there is a veritable boom. NorIUr'llly the tovm has a population of about 650, which has been swelled
to more than 4,000. In virtually all towns visited, bankers reported
little unemplo.vment, and trade is brisk. Near DuPont a tract of
60,000 acres is being developed as a proving ground by the U. S. Army.
The plant of the Louisville Cement Company at Milltown is operating
wi +,h a greatly increased force. In the area about Nevv Harmony approximately 100 producing oil wells have been drilled during the past
year.
It is generally admitted that Louisville (Kentucky) a.nd
surrounding terri tory has been exceptionally fortunate ir, the number o.f projects received. Local industrialists estimate the pay
rolls for 1941 in the Louisville metropolitan area will a~Jproximate
$190,500,000, compared with a normal yearly pay roll of $1uo,ooo,ooo,
or an increase o.f 90.5 per cent.
A Mississippi national bank officer is considering a plan
to expand the bank's loans to farmers. He proposes to employ a man,
who was formerly County At;ent, to make a survey of all farms in the
county and to solieit the business o.f the more desirable accounts.
The banlc cha.rges a rate of 8 per cent anti he proposes to set aside
2 per cent as a reserve. The field. man would spend his entire time
inspecting the farms and advising the customers.
MINNEAPOLIS
Southeastern 2/linnesota
"You can run a bank in your sleep these days" wa~> the way
one banker expressed bankin;~ con(:ii tions in this area. Earnings have
been excellent.
If you want to set:: a blank stare of 1.mcornprehension, try
to explain to :1 small nonmember banker wey the Government does not
want to sell him savings bonds. 1-k has no Govf.;:rnrnent bonds today
except savings bonds--no depreciation in his bond account--they are
1.91.
-6-
R-825-b
just as good as cash--they· afford a good yield--they are the best
investment for a country bank. You say that bank deposits might
grow to a point where they would encourage price inflation. He
says that deposits won't grow in his bank on this account--he only
invests money left on deposit with him by farmers who are having
the best year since 1920. Would J.arger bank deposits cause inflation? Well, perhaps, but he has never financed speculation. He
is all for holding do~n the price of things that the farmer buys
so that the present good farm product prlces will give the farrr.er
a chance to catch up on his repairs and replacements--anyway, it
isn't the banks bat the labor unions that make higher prices,
Butter fat sold at 38 cents and ·whole milk at 41 cents~
The price rose a hillf cent a pound while our representative was on
tour clue to the Government 1 s purchase of dail"'J products .for export,
(rumor said to England). Dairy cows were selling at a premium,
prices ranging from ~~80 to S~l25.
Farmers expect to pay $65 a month plus board and room for
farm hands. Another result is that all kinds of labor saving machinery such as tractors and milking machines have 'ueen in unusual
demand this spring.
Lakes Region in Minnesota and Wisconsin
The most important industry in this region is the mining
and shipping of iron ore. Last year 64,000,000 tons were shipped
from the ports of Duluth, Superior, and Two Harbors. It is estimated that under the present wartime pressure 75,000,000 tons will
be shipped from these ports, setting an all-time record.
Technological irr~rovements in hru1dling iron ore made in
the last few years have ma.teriall;v reduced pay rolls and, consequently, the record-breaking tonnage shipped from these parts is
not reflected proportionately ln increased business activity as compared to ten or fifteen years ago. At the port of Two Harbors where
10,000,000 tons were handled in 1940 sixteen train cre1·vs and 135
dock employees were used, .'J.s comparBd to !48 train crews and 600 dock
employees a few years ago, evon though the tonnage is now greater
than in years gone b,y.
Southern Minnesota
A number of the bankers told our representative their farmer customers expect their help in preparing income tax reports and
i t is getting to be a real problem to handle them. One bank arranged
with a firm of income tax experts to have the experts spend several
-7-
R-825-b
days at the bank and then placed c>.n ad in the local newspaper, advising customers that the service would be available for a reason-·
able fee. 'This seP.med to work out very well, although there was
some objection on the part of some .farmers to the size of fees
CPErged by the experts.
We haYe now procured for our permanent libraz:i about 100
individual theses submitted to the Graduate School of Banking at
Rutgers University~ A catalog of these theses was sent to the executive officers of' all banks in the Ninth District on March 15,
since which da.t.e we have received 279 requests for these theses.
During the month of March, we sent to all member banks
prospective State members operating ratios studies of member
banks in the Ninth District for the year 191.:.0.
~~d
KANSAS CITY
From a moisturfJ standpoint, the far;n situation in this
District is the best in y·ears. Because of this, the prevailing
opinion is that farmers this season ·will plant more corn and probably more flax but less sorghum. Great interest is being displayed
everywhere in the recently announced prcgrn.rr. to !J•c:;g the price of
hogs at 9 cents a pound. Nearly everyone believes that farmers
Vlrill increass hog production as abm.1t lh tushols of corn at present
prices are e(iual in value to 100 pou..'"lds of live hog at nine dollars.
'This ratio would be quite favorable to hog raising.
There is considerable uncertainty as to the relative injury dcne by the Ar-mistice D3,y freeze. Taking the Winter V!heat Belt
as a whole, there still remt\ins a large acreage of very fine wheat
and the indications are now that the crop will be appreciably above
average. But the fact rem3.ins that the .-:heat in many localities is
badly damaged although this drunage seems to be quite spotted.
Even more serious than the daJrtage to wheal;. was that done
to orchards. Few fruit trees had begun to enter the dormant stage
when the November freeze c:une and in some sections of southeastern
Nebraska i t is believed that as rM.ny as 90 per cent of the apple
trees were killed. Fartber south the d::unage is less and in the St..
Joseph area i t is estimated to be about 25 per cent. In northeastern Kansas some believe 50 per cent of the trees are dead. Even
where trees are alive, the damage to this year's crop will be very
heavj.
There has been much discussion recentlJr o.f the; desi:rabl..lity
of the Government financing the defense progrrun by borrowing from bcna
-8-
R-825-b
fide s::wers instead of creating new deposits by selling securities
to the banks. Evidentl,y th·3re has been scme misunderstanding regarding this talk and some people apparently feC!.r that the Government is virtually going to confiscate thdr savings accounts, giving
in exchange some kind of a Government security. Bankers are also
asking if they will be required to go out and hold meetings to urge
people to buy bonds as they did in the last war.
DALLAS
Southeastern Oklahoma
The recent rise in the price of cotton has brought an influx of buying orders from the eastern rni.lls, consequently a great
man.y farmers who hc:id placed their 1940 cotton in the Government loan
have sold their equities.
Farming operations thra'lghout the territory visited have
been retarded by too much rain durinc; the winter and spring. Ver'J
little. corn has been phmted to date. Record-breaking crops, of all
kinds, were produced in 1940 and farmers generally are in finr::: financial condition to start the new year.
Livestock are in good condition due to a very mild winter.
A number of the bankers visited in Oklahoma. complained
about some of their best farming land located along Red Ri ~rer becoming inundated when the new Red Hiver dam is completed.
East Texas
The impact of the defense progra.rn has stimulated to maximum capacity the production and manufactt<re of lurnber and other forest products. Tho enlarged scope of employment has expanded retail
and general business substantially. A sellt:r' s marl-~r-,t exists for
stumpage (standing tintber). Prices, which a year ago ·ser(-: in the $3
to :h:4 per thousand r'l.nge, have now advanced to tho /~7 to QilO area,
depending on quantity, quality, and accessibilit;y.
Livestock raising has greatly expanded in this are;:::, in recent. years. One authority estimates the cattle popula+,ion has increased 119 per cent in the past seven ,years. Further;nore, substantial
improvement tas been made in the bre0d and quality of holdings; likewis.e, through research and rnanagenu:.nt, the carrying c~.p.acity of pastures has been increased. Stocl\lUE.lrl arc in a pn.rticu1arly prosperous
position, Prevailing prices, the best in cl. decade and a half, along
with generally gool.i condition of ::mimals, e,ccount for highly remur~er
ative marketings.
-9-
1.94
R-825-b
Oil exploration and development contribute rauch new wealth
to this section. Substantial production has been developed, particularly in Anderson County, while new leasing (with, of course, usual
rentals and bcnuses) is quite widespread.
SAN FRANCISCO
Ogden and Salt Lake C:tt,y
He:;,.ghtened activity in construction, bot.h residential and
co;ruaercial, he.s contirn.'ed,, the impetus arising from Army activities,
such as the SupoJ.y Depc.t at Ogden, the Arse:~w.l and Airports. ugJen
is in the courae of prcparin&. p:ans for t:i.t :ea;.;t :.100 neYl h:1using
units in E.ddHioll to l~O contemplated b:·r the P. B. A. While no appreciable am'.ntHies of defense contracts have been [;laced in the
ure::,, the increasing .temand of rai1.roads a,1l1 mines hc:>.s accelertted
n.a.nuf·'tctul'ing :=t.cti·irjtie,'-;, pa1·'::.icul.arly in tiir; i'ound.ry and m.·.cc:hir;e
shop fields.
1941.
1\larch
Federe.l
Reserve
~sits
Bank
1
B()Ston
New York
Phtladelphia
Ch:veland
Ric h:r.onrl
Atlanta
Chicago
St. Louis
Minneapolis
Krmsas Cit7
Dd.l:ls
San Francisco
Member ll'i;2nrnember
6
58
62
87
1
l
;
.
Met:tirw~
~ :_,0
Total i i11Ylf!be;t
~
At!-~.... en·:lE,d
J
\,
i~1~uber
,g
l
21
20
79
82
6
1
r)
3,195
2,034 '
65
152
3
1+31#
6
11
35
88
t~
11
62
15
1
2
1, 56\)
100
362
51
97
148
r(
:31,1
20
10
7
24
10
8
2'7
3
194
69
25
AddrG:;se.:.; lvlacie
2
11
I
_,
! :c\t;tenc:.anc~
'-j.
53
11
I
+4,.:_,~~.::>
o E"'•11' ~
73
34
79
33
6
3
12
hl5
1,:50
563
Not completely reported.
2
5
I Attt:ndu.nce
90
50
2,034
270
2
0
l
8
125
0
()0
18
2
0
.L,l72
150
0
6
1,050
490
BOARD OF GOVERNORS
R-826
OF" THE
1.95
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1941
Dear Sir:
It will be appreciated if you will kindly obtain as
early as practicable from each weekly reporting member bank in
your district a report on form F.R. 550 of "Loans and Commitments for National Defense as of April 30, 1941". A supply of
form F.R. 550 for use in obtaining these reports and of a memorandum of instructions has been sent to you under separate
cover, A copy of each is attached.
The Office of Pro due tion 1Janagement desires information showing the extent to Which banks are financing prime contractors and subcontractors, large and small, engaged in
erecting plant facilities or in providing supplies and equipment for defense purposes. It is felt that such information
would be useful also to the Board of Governors~ It is therefore suggested that you request the earnest and prompt cooperation of each reporting bank in furnishing the information
called for by the form,
The reports should be sent to the Board of Governors
from time to time as a number become available and after they
have·been scrutinized to see that they appear to be in proper
form.
Very truly yours,
,~··-
Enclosures 2
TO THE PRES :WENTS OF ALL FEDERJ:;L RESERVE B.ANKS
(Enclosures with addressed copies only)
BOARD OF GOVERNORS
OF" THE
R.-827
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO T'"IE SOARD
April 30, 1941
Deaii Sir:
For some time it has been necessary for
some of the Federal Reserve Banks to append·a number
of footnotes to their reports on Forms F. R. L~.17 and
F. R. 417a in regard to industrial advances and
commitments. Accordingly, it has seemed desirable
to revise these forms so as to eliminate the necessity
for such footnotes. A supply of the revised forms is
being forwarded to you under separate cover, and it
is requested that reports be submitted on the revised·
forms beginning with the week ending 1~rednesday, May 7.
Very truly yours,
E. L. Smead, Chief,
Division of Bank Operations.
TO THE
PRP.SIDE~TTS
C'F ALL FBDERAL RF.S"PTVF:
BLH'~S
BOARD OF GOVERNORS
R-828
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DFP'ICIAL CORRESPONDENCE
TD THE BDARD
May 2. 1941
Dear Sir:
In order to facilitate the work of the Bureau
of Engraving and Printing, which now closes at ~ :~0 P .Y.,
except on Saturdays 'When it is closed all day • it is
desirable that in so far as practicable requisitions for
Federal Reserve notes (Form F. R. h5) be forwarded by
mail in time to reach the Board at least one day in
ad'Vance of the r'lay on which the notes are to be shipped.
Such requisitions should indicate the date on which
shipment is desired so the.t the notes v.1.11 not arrive
at the Federal Reserve Bank or Branch at an inconvenient
time. A supply of Fo:nr.. F. R. l.t5 1 revised, is being forwarded to you under s~parate cover.
Telegraphic requests for shipments of Federal
Reserve notes should ·be rede when time ·..ill not penni t
the use of the l!..e.i 1 s. In order to have shipments go
out on day of receipt by us of a telegraphic request,
the telegram should reach the Board not later than 12
noon. It will not be necessary to indicate the number of
packages of each denomination of notes desired in the
case of telegraphic requests. A confirmation on Form F. R.
45, with the word ''confirmation" printed thereon, should
be forwarded where request for shipment of notes is made
by telegram.
E. L. Sr::oad,
Di vi si on of Ban¥
TO ALL FEDEF.P.L Pf?SBRVE AGF::t-TTS
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DF'F'ICIAL CORRESPONDENCE
TD THE BOARD
1\;a.y
3. 1941
Dear Sir:
There is enclosed for your information
a copy of a letter to one Federal Reserve Bank
in response to an inquiry regarding the method of
reporting on Daily Balance Sheet, Form 34, certain
transactions in connection with Defense Savings
Bonds.
E~ 1. Smead, Chief,
Division of Bank Operations
Enclosure
TO THE PRESIDENTS OF ALL
EXCEPT MINNEAPOLIS
FEDERAT.~
RESERVE BANKS
May 1, 1941.
Mr.
5
Vice President and Secretary,
Federal Reserve Bank of
Dear Mr.
Reference is made to your letter of April 24,
regarding the method of reporting on Daily Balance Sheet,
Form 34, certain transactions in connection with Defense
Savings Bonds.
It is suggested that the stock of unissued Defense Savings Bonds be included on the reverse of Form
34 in the item 11 0ther custodies held as Fiscal Agent of
the United States." It is also suggested that collateral
security deposited by issuing agents and Series E Defense
Savings Bonds on consignment be reported on the reverse
of the form following the printed collateral and custodies
items as shown below:
Defense Bonds on consignment
Collateral - Issuing Agents
Very truly yours,
(Signed)
E. 1. Smead
E. 1. Smead, Chief,
Division of Bank Operations
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
R-8_30
WASHI.NGTDN
ADDRE88 OFFICIAL CORRESPONDENCE
TO THE BOARD
May 7-, 1941
Dear Sir:
Referring to the Board's letter R-765 of
January 11, 1941, the following change took place
during April in the list of nofu~ember banks that
have in force at;reements v;i th the Board pursuant .
to the provisions of Section 8(a) of the Securities
Exchange Act of 1934:
Deletion
•
Michigan
Detroit
Commonwealth Bank
(Admitted to Federal Reserve
membership on April 25, 1941)
Very truly yours,
(_
_:::..~
~fJ?-~
L. P. Bethea,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDEF.AL RESERVE BANKS.
~ut
BOARD OF GOVERNORS
OF" THE
R-831
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DF",.ICIAL. CORRESPONDENCE
TD THE BDARD
May 10, 1941
Dear Sir:
The President of the United Stc.tes on ltpri l 29, J.9hl,
approved an Act (Public Luw 43--77th Congress) to cxpc·di tc the
national defense by authorizing the Secretary of 1'rc.r or the
Sccrctc.ry of the Nc:vy, in their discretion, to wc..ivc tho requirement
contained in the Act of' Lugust 2L:., l9:2i~ for porformc.nce c.nd payment bonds in connection ~nth supply contracts for the manufacturing, producing, furnishing, cbnstructi on, al tcrc.tion, ropc.ir,
processing or :J.ssembling of vessels, aircraft, munitions, mc.tcriel
or supplies of r~ny kind or nc:.ture for the J•rrrry or the ~~c.vy. The
Let of J>ugust 2L, 1935, knovm c.s tho Killer L.ct, requires in certain circumstances performance and payment bonds in the case of
contracts exceeding $2,000.
A copy of Public Law 43 is enclosed. There is also
enclosed a. statement published at page 3106 of the Congressional
Record for lipril 4, 1941, explaining the purpose of this legisla•
tion. This statement does not refer to the Secretary of the Navy
·but subsequent to its publication the bill was arnended so as also
to authorize the Secretary of the Navy to ws.ive the requirement of
performance and payment bonds.
Very truly vours,
v~
~·j.r!~
Ernest G. !raper
Enclosures 2
TO PRESIDENTS 0? LLL FEDEW,L RFS~RVF' B~.l'!I~S
COPY TO FEDERi.L RESFRVE DEFENSE CONT~.CT OFFICERS
R-83la
~UBLIC LAW h3--77th CONGRESS]
@HAPTER·81-·l'St SF!SSIO~
@.. loc;cfl
AN ACT
To expedite the national defense by clarifying the application of the
Act of l1.ugust 21_:, 1935 (49 Stat. 793), as to the requirement of
mandatory·performance and payment bonds in connection with supply
contracts.
Be it enacted by tho Senate and House .of Representatives o'f
the United States of JmtcricaTilCO'ngrcss assembled, That the Actor
August 2£~. 1935 (~ Stat. 793), may, in the discretion of the Secretary
of War or the Secretary of the Navy, be waived with rcsp~ct to contracts for the manufacturing, producing, furni.shing, construction,
alteration, repair, processing. or as~embling of vessels, aircraft,
l!nlnitions, materiel, or supplies of any kind or nature for the Army or
the Navy, regardless of the terms of such contracts as to payment or
title: Provided, That as to contracts of a nature which, at the date·
of the passage of this Act, would have been subject to the provisions
of the Act of August ~-• 1935 (49 Stat. 793), the Secret£,ry of War or
the Secretary of the Navy may require performnnce and payment bonds as
provided by said Act.
Approved, April 29, 191J.l.
.'·
R-8;lb
CONGRESSIONAL RECORD -
SEHATE
April-.4, 1941, Page .3106
STATg,~T
WITH RESPECT TO S. 1059
Section·la of the act of August 24, 19.35 (49 ·stat. 79.3),
commonly kno'tm as the !.~iller Act, provides that "before any contract,
exceeding $2,000 in amount, for the construction. alteration, or repair of any public building or pubUc vrork11 is a;:;arcled, the contractor
shall furnish a performance bc>nd for the protection of t:'le United
States, in n:a e::.ount satisfactory to the contracting officer, and a
payment bond, for the protection ~f persons supplying labor and material in the prosecution. of the \'.Ork, m th sureties satisfactory to
the contractin.c~ officer and in an amount specified in tl'le statute.
It is custor.1ary to require performance bonds ~-n an amount at least
equal to 10 percent of the contract price. P~nJent bonds must by
statute be in penal amount equal to 50 percent of the cost of the
work in contracts belo'7 $l,OOC,OOO; 40 percent for contracts from
$1,000,000 to $5,ooo,ooo, and in penal amount of at least $2,500,000
in larger contracts. From the phraseology, "public building or public
vrork 11 of the act, it would appear that the reqd.rer.:.ent for these bonds
was intended to relate only to contracts for building<J, river and
harbor improvements, camps, cantonments, and such other real estate
projects, or the alteration or repnir thereof.
In construing the act of August 1, 1892, lmm.m ::1.s the Heard
Act, the predecessor of the Miller Act, the Supreme Court of the
United St,. . tes, in 1910, held that a boat ...-ms a,.public YJork,:md that
whether a rrork is "public·" or not does not depend up01i. its being
attached to the soil, but, if it belongs to the represento.tives of the
public, it is a "public vJOrk. 11 Follovdng that reasoning, the Attorney
General of the United States, in 19.32, expressed tho opinion that ,-x:>rk
on a vessel mmed by the United St: ,tes vras ·a public rrork ',r.i t:un the
meaning of the net. .AgD.in in 19.36, the Attorney Gencrnl. ruled that
contracts exceeding $2,000 in amount, for tho altcrution or repair of
United States Const Guard vessels, boats, and aircraft, eince the
·
property belongs to the United Sto.tes, were contrncts for public vrork.
He further st::>.tod thnt contracts for the construction of such craft
mich provide for the passing of title to the United St,.,_tes during
the progress of the uork as partial payments are mnde ;:;.ro Y.'i thin the
meaning of tho torm "any public '~rk." EX'bending the analogy,. he held
the same ye::.'X! tllnt a contract for making cotton mnttrossos from materials ormod by the Government Y!llS public uork.
203
R-83lb
·~
-2It 11ns but a step further for the Comptroller General to
find that any Army contra.cts for supplies vlhich pl"ovide for p.:ll'tinl
payments as the Y.ork progresses nrc contro.cts for public rork, since
title pa.sses to the Government when the first portial payment is made,
requiring performance nnd payment bonds under the t!illcr Act. ·By
this reasoning, nll sorts of contracts involving pnrtinl payments for
supplyin.z aircraft, machine gun~, tanks; clothing, neckties, shoe- ln.ces,
and other articles, must be classified as contracts for public works,
ma.ld.ng it incumbent upon the contractor, no tw.tter nhnt his financinl
strength may be, or whether the bonis ore deemed to be necessary for
the protection of the United St~tes., or of la.borers nnd .mo.teriall'!len,
to furnish the performance and payment botxis specified by the t~iller
Ac~. . The decisions of the Supreme Court, the l'.ttorney General, n.nd
the Conptroller General. ore binding upon the 1Jor Departnent, and c~
pliance there·r,'ith is na.nda.tory. The same reasoning did not apply to
Navy contracts since they only take a legal lien·(under a. sta.tute
passed in 1911) instead of title ~hen partial pnynents nre made.
Believing thut Congress originally ;intended that the Heard
Act and latex- the Miller Act .should apply only to construction contracts, the War Department has submitted to the CO!loCTess a draft of
legislation designed to clarify the meaning and application of the
Miller Act to make it inapplicable rk;> supply contracts .for the Army •
The proposed. legislation was embodied in$, 1059, the -present bill, as
origina,lly introduced. It was the view of the committee, however, that
to center responsibili.ty it would be better to permit the Secretary of
War, in his discretion, to waive the requirements of the Uiller Act as
to bonds, so that the bill was amended and reported i11 its present
fo-.m. The proposed act does not affect construction contracts.
NECESSITY FOR SUCH LEGISLATION
The national-defense program, calling for almost unheard~of
quantities of material and equipment for the men entering the military
service by voluntary enlistment and by induction tu1der the Selective
Service Act, the manufacture and construction of aircraft, munitions,
tanks, guns, and supplies of every sort, has taxed the industrial
resources of the United States to such an extent that private capital
is unable to finance to completion thousands or supply contracts, many
of them running itl.to forty or fifty millions ·of dollars each. Increased facilities must first be constructed, new machinery purchased,
and countless new employees engaged. The contractor then finds hi~ ·
resources expended and must seek additional financing of his Government
supply contracts on a scale never before enco~tered. To meet this
situation the Govo'rnment has provided for advance payments, when necessary, at the beginning of the contract, and partial paYJilents as the
work progresses, to simplify priv~te financing.
R-8'ilb
As a result, however, of the interpretation given the Miller
Act, an inconsistent situation has grown up. If by the toms of a contract, 100 airplanes are paid for on completion of the contract, no
Miller Act bond is required. If 100 airplanes ore paid for as each
airplane is delivered, no Miller Act bond is rcqui:ced. If the contract
is let on o. cost-plus-a-fixed-fee basis, no i.'Iillcr Act bond is required. If, however, partial paynonts are mf.ldc on o. lump-sum contract
to help the contractor finance the work in progress prior to its
delivery, I.~ill'cr Act bonds must be supplied, This na.ndo.tory requirement for perforna.nce and payment bonds where pc.rtio.l payments are made
to help finance the work in progress has.resulted in serious diff~
culties and delo.ys in the financing and progress of the defense
progra.r.1.
Tho final execution and approval of a nurJbor of large aircraft contrc..cts has been delayed from 2 to 5 nonths beco.usc of the inability of certain companies to obtain Miller Act bonds.
In sone cc..sos .us nany as lJ or norc bonding conp.:mies hnve
hnd to be called upon to provide a single bond, nocossi tnting sending
it from place to plnce for signature. In other cnses the Govcr11r.1ont
woi ted while tho surety coBpo.ny nude a long financial investig.2tion
and extructed the last ounce of security from the contr·'.ctor r s free
assets. In sonc cases the contract had to be re'."t.ri tten on a cost-plusa-fixed-fcc basis or with partial payncnts elininatcd so· that bonds
could be waived. In one case a contract for $1),115 ,1.38.13 for furnishing 341 airplanes was executed Septer.:ber 14, 1940. It was not
possible for tho contractor, a reliable b\lt trenendously expanded corporation, to furnish tho necessary bonds. Tho bond requirement was
finally removed in February 1941 by elinating tho partial payments
provided by the contract, resulting in a delay of 5 nonths before a
complete contract oouJ..d be obtained. With the cli::1ina:cion of partial
payments, financing to a total of $6,ooo,ooo was needed to finance this
contract to the delivery stage.
In another instance, involv:1.ng -001 original. contract and a
change order for 3,000 airplanes, at a total cost of $)4,717,082.50, a
daley of 6 months occurred before a legal contract, could be finally
approved, and it was necessary to eliminate partial. payments by appropriate change order because no bonds could be furnished. Such examples
might be muJ..ti:;)lied mnny times.
The other side of the picture involves
have occurred. when bonds have been furnished.
~.fficultios
that
In many instances surety corapanies, clairJing to be financing
institutions within the meaning of tho k·.signrncnt of Cl.:rl.ns Act of 1940
R-83lb
-4(Public, Ho. 8ll, 76th Cong.)~ nre ruquiring contrnctors to give them
nssigilrnent$ of all rights under supply contracts on ~;mich bonds ore
given. If n bo.nk loon is necessary to enable the contractor to finnnce
his v,ork o.nd an nssignment to the bnnk is contrmplntod, tho fnct that
tho bonding comy,nmy claims a priority hampers bnnlr fi:r..ancing. Although
the Judge Advocate Gcnernl of the krmy has ruled tho.t bonding companies
are not financing institutions within the meaning of the k;signment of
Claims Act of 19LJO, novertheless many banks are reluctant to make defense loans :i..n tho fo.ce of prospective litigo.t:l.on wlth o. surety company.
In this si tuto.t3.on~ tho Government supply contrc.ctor r'ucots practic:.llly
insurmountable obstacles in getting private financing.
Other surety companies ore demD.nding from contr;:;.ctors indemnity for the bonds written by them o.nd arc requiring tho deposit of
collateral security or the giving of mortgages or other liens on the
contractor's plnnt nnd equipment. T:1is prtlcticnll;y strips tho Cl.Jntractor of o.vcilable bankable socl;t.rity when a loan is necessary to finonce operations undor tho contract.
The use of partial payments, becnuse of tho necessity for.
giving performo.nco end payment bonds tmder the f!fiJ.lor llct, ha.s been
practically discontinued by the War Department as a means of financing
Ordnance contracts and some Air Corps contracts. Frequently, if
partial paymon:~s o. ro not used, tho contrD.Ctor must h.:tve financing up to
50 or 60 percent of tho nmount of his contract prior to receiving payments from the Government for articles completed. Bo.nlw hosi tc.to to
make lonns in such amounts. J~dvnncc payments under o:d.st.ing law nrc
authorized only up to JO percent of tho amount of tho contract. If tho
Government makes a.n advnnrw of 30 percent~ tho bunks necessarily fool
that they nrc not :>::>cquired to mo.l<e lonns to take up 50 or 60 percent,
because their clnins oro subordinate to the advance pnYT;10nt. These
are practical difficulties experienced in financing contr,:o..cts for
carrying out the dofcmea.. pt'ogrCtm.
In ondco..voring to solve tho difficulties in obtaining bonds
for large Air Corps contracts, reduct!on in the penalties of performance bonds to 5 percent of the total contract price no.s o.ttemptod by
the War Dopo.rtncnt. This resulted in refusal by the surety companies
to give performance bonds to smo.ll contrctctors because tl1e "business
was not considered sufficiently profitable or n.ttro.ctiv;;;. This situation aompelled tho Jj,r Corps contrr..cting officers to the pena.l o.mcunt
of tho performance bonds at the dlct').tion of the surety compo. nies.
Surety companies have, in some instD.nOOe, required o.grecments
from contractors to the effect that no r:.tore contr,J.cts v~ll be undertaken until the ones on '117hich honds already ha.vo been y;ritton nrc
~06
R-83lb
- 5completed, In one case a surety company refused to write a.ddi tional
bonds until an existing contract was completed, with the result that the
contractor was too late to bid on pending invitations and lost the
opportunity to undertake additional defense work, Necessarily, this resulted in retarding and delaying procurement under the national-defense
program, How many other instances of this kind actually exist is not knovm,
but they are constantly being mentioned orally to contracting officers.
Written complaints are ·stated by an Air Corps report to be relatively few
for fear of black list.
The original purpose of the Miller Act was to protect laborers
and materialmen with respect to Government construction projects, since
no mechanics' or materialmen's liens attach because of Government ownership. Ordinarily lien protection does not exist and is not needed with
respect to contracts for supplies, as distinguished from constnlction, between pri vu.te individuals in the business world, N<3Cessarily 1 the producer
or manufacturer must pay his laboters weekly or at least twice monthly. It
is the last claim he fails to pay, The individual labor claim, therefore 1
i f any, is small in evont of bankruptcy and has a priority there. There
seems to be little logic in requiring payment bonds for laborers employed
by contractors with the Government, when such laborers are protected by
the Fair Labor Standards Act, the Walsh-Healey Act, and the Bacon•Davis
Act as to wages, hours of labor, and methods and times of payment.
Likewise, materials usually are sold on a 30- to 60-day basis,
cash on delivery, or only after satisfactory assurance of sound credit
standing on the part of the purchaser, Materialmen can protect themselves
and are better protected by adequate financing of the contractor insuring
performB.nce of the contract than by bonds. With rospect to performance
bonds for the protection of the United States, it may be said that the
Government is its own insurer in other matters, and there is little likelihood of substmtial loss in connection with the furnishing of supplies
payable on the installment plan; since the pa~nents do not exceed work
successfully nearing completion.
The need for legislntion such as S, 1059 is considered by the
VIJar Department to be urgently neoded at this time in order properly to·
expedite the national-defense program under tho now appropriation acts. The
bill as reported would permit the Secretary of War to require performance
and payment bonds in any case of supply contracts where he deems them to
be necessary, · The " 1ar Department requires porform0..nce bonds in !lk'lny
casas where that Nquirement is not mandatory by law,. and s. 1059 as reported would permit· the same practice with respect to the bonds that would
pe ·authorized ·to· be Wa.iverl· theround.:.Jr when· ·the interests of the Government
so require,
~08
BOARD OF GOVERNORS
Or THE
FEDERAL RESERVE SYSTEM
R-832
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
M~v
14, 1941
Dear Sir:
Subscri?tions to the
Advertiser, which has been
u.
~ent
S. Governrr:ent
to the Federal
Reserve Defense Contract Officer at your Bank
and branches, if any, expire June 4, 1941.
For your information, there is enclosed
a copy
of a letter
v~itten
this date to the U. S.
Goverr.w"'ient Advertiser with respect to these subscriptions.
Very truly yours,
%
~·:i~
Ernest G.
lrap~r
Enclosure
TO THE PR3SIDENTS OF ALL FEDLJ.1.LL BESERVE BAN'KS
~09
R-832-a
Ma,y
14, 1941
U. S. Government Advertiser,
511 Eleventh Street, N. W.,
Washington, D. C.
Gentlemen:
Receipt is a.cknov;ledged of your bill, addressed to the Federal Heserve System, for the renewal of 37 subscriptions to the U. S. GoverTh~ent
Advertiser for the period Ju..>1e 4, 1941 to June 4,
1942.
Since these subscriptions were entered,
most of the work at the Federal .Reserve Banks and
branches in connection v.ri th which use was made of
the U. S. Government Advertiser has been turned
over to District and Area Coordinators at tr,e Federal Reserve Banks and their branches which function under the direction of Mr. Robert L. Mehornay,
Chief, Defense Contract Service, Office of Production Ma.>1agemerit. Accordingly, the renewals of the
subscriptions is a .matter for the determination of
Mr. Mehornay' s office, and your bill, dated May 5,
has been referred to him.
Very truly yours,
(Signed)
Chester Morrill
Chester Morrill,
Secretary.
~i.O
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-833
WASHINGTON
ADORES. OF"F"ICIAL CCRRESPCNOENCE
TC THE SCARe
h1ay
15, 1941
Dea.r Sir:
The Board of Governors of the Federe.l Reserve System is
advised that the following J:wlidays will be observod by Fed.era.l
Reserve Banks and branches durlng the month of June 1941:
Richmond
Atlanta
Birmingham
Jacksonville
Hash ville
New Orleans
Louisville
Memphifl
Dallas
El Paso
Hou::lton
San Antonio
June 14
(Saturday)
Philadelphia
Pittsburgh
June 17
(Tuesday)
:Soston
June 3
(Tuesday-)
Confederate Memorial
lhy and Jefferson
Davis' Birthday
Flag Day
Buakor Hill Day
On the cates given the office::; mentioned will not participate in either the transit or tne Federal .Reserve note clearing through the Interc.'U.str·ict Settlement Fund. PloasP. includ.e
transit clearing credits for the offices affected on eo.ch of the
holidays with your credits for the fo1J.ow:Lng business day. No
debits covering Federal Reserve note shipments for account of the
head offices affected on Oi:J.ch of the holida;rs si1ould. be included
in ;y·our note clearing on those datc;S.
Please notify branches.
Vory truly yonrs,
%?zLA:..A/.
~L
Nel~·ou,
~~.
A.
Assi;:;taut Secretal'"'J.
TO THE PRESIDENTS Of ALL FEi)fltAL EESEJ'!VE BANKS
BOARD OF GOVERNORS
~ii
OF" THE
FEDERAL RESERVE SYSTEM
R-834
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
May 15, 1941
Dear Sir:
You will recall that on December· 12, 1940 (B-1S5l),
we forwarded you copies of memoranda relating to surety bond
req_uirenients of the Army and Navy on defense contracts. On
May 10, 1941 ( R-831) , \ve :·orwarded you a copy of an act of
April 29, l941 :-ele.ting to waiver by the ~3ecretary of War
and the Secretcn,y o:r· the Navy of .surety bond requirements.
In eorme~tion with the above, there is enclosed
for your ini'orm=:.tion a co~)Y of a memorandum from the Under
Sec.,...t:Jt<-try cf ~~a.r to 'Ii:":e Director of Purchases und Contracts
governing th~~ a,)pl:'..cc:3ion of the [)revisions of the act of
April ::::9, 1941 in so far as the' v;ar Depa.rtment is concerned.
We understand that the Navy DepHrtFIGnt is formulating its
policy under that act and we hoge to be 1:ibh~ to advise you
at an early date as to the policy adopted by tllat Department.
Very truly yours,
Enclosure
TO PIIESIDJ..J:,'TS OF' ALL I<BDE.k.AL .RE.'::)ERVE .d.t;.M\.8
CO.flf TO :BEL>E.Ii.AL h'EdlJ'iVE i.lLF'El'iS:l!: CON'IAAC'I OF':BICJ:J-:8
R-834-a
W.i-'.R DEJ:>Aft'Ud!l~'l·
Oii'f!CE 01 TLE UNDER S:ECflli"l'iilif
Wi-u.S.b.Il'·iG'IOl'i, I'. C.
M.ay 6, 1941
MB.lOE...JiiDUhl for 'i't.e_ I'irector of Purchases and Contracts
S":J:&ECT:
Wai v2.r. unde::" autbori ty or' the .Act of April 29, 194.:1
(Put.iic J·~o. 4.Z., ?"th Congress} of req_ui rcn;ents for
performm:ce and pc.yment bond.s.
1. ThE:; !'ol1cv:int',S ··1ill gover·n the application of the provision::: of the Act of April 29, 19•±1, which reads:
"That the Act of .august 24, 1933 (49 Stut. ?92-), ma:y~ in
the discretion or thE": S8crctury of Wa:..~ or the Secretary
of the Ne.vy, bf• w2ive.d ~-.·itt rrs.x:ct to contructG for the
manufacturin~, producint;, furi:.isl:.iut;, cor.struction, alteratj_on, repai;.~, .[.n:•ocessin<,, or c..ssemblint- of vessels, alrcrlift, mun~ tions~ mz::,terteJ, or· suj?pli >S of tulY kind or nature for the .Army o1· the ~i•J.VY, regardless of the terms of
such contructs 'iS to ;_),,.y.n,,_,t:t or title: P:ovided, thc..t us to
contracts of e. m.~turc whieb, nt the datE: of' the pt:lGS<:J.ge of
tl:ia Act, would. t1• .. ve br.;en sub~~~ct to the provisions of the
Act of t:..ug11.5t ~4, 1935 ( ·B Stat. 793), the Svcrot·.iry of War
or the Secr(;t;:try of the l\l!iVY n1ay require _perforir.~mce !!r.d
paynv~nt bonds o.s prcvid.ed by said. Act."
2.
In
~""ny
ce::se in ·wtich tnc: cbief of tt·f:\ S'U.ppl.f arm or
service .;oncerned considG:::·s tlli_j_t bec.::...~~se of Si-h'Ci::il ci rcumst::a1cc.3
a paym8nt bond should be requi.l:'("'d in connection with c.n;; supply
contract by reason of provisions for r.wrtial l)uyments or otherwise,
he v;ill mc.ke recorr.l!l8ndat:!0!1 t.o th.1t efi\;ct to thG Under Secretd'Y
of War, ':.tccomr~nieci b;;~ a st•::..t·..,mcnt o1' f.J.cts upon whict. the recommbndation is bes3C:~, :i.n order tt.:.>t the Ur:d;;;r Secret·~ry of· Wb.r mu.y deterinine
whetht·lr st1cn b.:md r~bould be I't::'·lt,i:':'E.-d. \l'it.ere a P~•.Y""lllf;nt bond ia NJquired, the contrdct vdll so state.
3. T~:€' Secret~~ry of' War· h:1s determined, except as provided in pa.ra.gru.ph 2 above, tht;.t uo pt:ty;ment bond slH.ill be re4_uired
in connection with any supply contr~j_ct ( t.e., contr~.cts for the
manufacturing, producing, furnishing, construction, alteration, repair, processing, or asser!.b1J.ng of vessels, aircrttft, munitions,
mat(~rid, or supplies of any kind or nF..ture for the J'.:rm;,d.
>
R-834--a
4. The Secretc:1ry of Wur has determined, with respect to
performance bonJs in connection with any supply contract (i.e.,
contrr1cts for the fll(:.tnufcwturing, produ:::ing, furnishing, construction, ulterution, repair, _processing, or assembling of vessels,
aircraft, munitions, mutel·iel, or suppliE'S of :my kind or nature
for the Army), th::>t no such bond shall in the future be required
by virtue solely of' the provlsions of" the Act of August 24, 19~·5
(49 Stat. 793) or Parc.gruph 10 ~ (2), Army Regul'itions 5-220, but
.Parn.graph 10 ~ ( l}, Anry Hegulations 5-220 ::,nd other pertinent
Army He§;ula tions u.nd instructions of the Secretury of War rel~1ting
to pcrfonr,unce bonds on supply contracts wi.lich ar.:l not also contracts fo::' "public work of the United States" shall equally :1-pply
to supply contracts ~1ich are cluss8d as contracts for "public
work".
By direction of the Secretary of War:
( Signed ) RO l:lEHT
.e.
J?A'ITERSOJ',
Under Secrc:ltary of ¥n.:.r
-2-
R-835
:SOAhD Of l.i-OVEHNORS
OF THE
FEDERAL RESERVE SYSTEM
STATFJi.liiENT FOrt THE PRESS
For release in morning papers,
Monday, May 19, 1941
The following swnmary of general
business and fin:~ncial conditions
in the United States, based upon
statistics for April and the first
half of ;~ay will appec.r in the June
issue of the Federal Reserve Bulletin and in the monthly reviews of
the Federal Reserve Banks.
\Vholesale commodity prices advanced shar0ly in April and the
first half of May, with the exception principally of metals for which
maximum prices had been established.
Industrial projuction declinAd in
April, owing to reduced output of coal and automobiles, but increased
rapidly in the first half of May c.:.s operations in these industries ··:ere
resu.rned.
Production
In April the Board's seasonally adjusted index of industrial
production declined to 139 per
4 points from March.
r~ent
of the 1935-1939 aver!'tge, a drop of
The decline reflected chiefly a sharp reduction
in output of bituminous coal, as most mines were closed during the entire month.
'l'he mines were reopened on Ai'ril 30 and in the first half
of May coal output increased rapidly.
Automobile production also decHned in April, owing to stoppage of vrork at plants of the Ford Motor Company during an industrial
dispute.
This was settled about the middle of the month and domestic
~1.4
R-835
-2-
output has since advanced to a high monthly rate of over 500,000 cars
and trucks.
Announcement by the Office of Production Management that
output in the twelve months ending July 31 would apprnxim.ate 5,290,000
units indicates that a rate
~lose
to that now prevailing should be mai.n-
tained trrough July, although thera is usually a considerable
~ecline
in this period.
;:;ted. production was curtailed somAwhat iu the l:3.tte.-· h<df of
Arril b:r .:::hort:.ages of coal and coke and r)utput Lieo::::d.ned from a. J.evel of
100 per cent d' cap,::.city
~.o
9L1. ;Jer ce;:tt at the munth rmd.
Sl.lbsequentiy
output increrl.sed, reB.ching 99 per ecnt by the mirlEe of ::lay.
In most othe:Y> lin(?':l activit;:" c·.)ntinuecJ. to incre<J se during April
and the first half of May.
Mac;_linery pr;)duct.ion rose furtht::r Rnd acti v-
ity in the aircraft and shipbui .Ldinr; inductri es corjtim.J.E:d to E>XlX-tnd rapidly.
Consumption of nonferrous met'lls also
aciv:lnc,~d,
a.nd, as in March,
domestic sources of coppe1' wm·e suprlementcd by large supplies from Latin
America.
in l,ic.rch.
'I'exti le proJnction rose furtLer i'rorn the
hi~;:;h
rat<J prevafling
Consumption of rar-r cotton j_n .:\IJril amount-:Jd to 92C,OOO bales,
a new record level, and rayon delivE,ries E'.lsc> rose to a new peak.
At
wool teY.tile mills act-ivity was maintainea near the hirh Jv!arch rat8. Cont.innE>d advances were reported in the ehelaical, paper, and fnod industries.
Anthracite production declined considerably in April, owing to
a delay b,v deal•;o;r-s j.n I;lacing usual
first half of i.>Acw.
S~)ring
orders, but increased in the
Output c:>f crude pd.roleum showed 1i ttle chn.ng•::: from
the March rate, :following some increase from the reduced level of the
R-835
-3winter months.
Iron ore shipments in April a;nounted to about 7,000,000
tons, an exceptionally large amount for this time of year, and mine output of
noni\~rrous
metals continued at near capacity rates.
Value of
c~)nstruction
contract avmrds in April declined some-
what from the high March total, owing principally to a smaller volume of
defense plant contracts, according to F. W. Dodge Corporatio:1 reports.
There was an increase ia contracts for publicly financed defense housing,
n.nd awards for private residential building rose by about the usual seasonal amount.
Di:st..ribution
Sales ')l general merchandise at department and variety stores
shewed abouf.· ttce usu'cl season''.l rise from lvia.rch to Apri 1., making al'.ow-
which had amou:1l-·:;d to
52G,ooo
cars and trucks in March, rose further in
April <'.nd S'"1le:::: of used cars wer;cJ at peak levels.
Frei~;~r:\,-car
lo:;dings declined sh,crply in April, reflecting a
reduction in shipne;n+,s of cm:d and coke, but increased in the first half
of May when co:1l :.liw:s \Jere reopened.
By the midcle ·Jf the month total
loadings had ri0en to a v;eekl,y rclte one-fourth hi[/her th::m in the corresponJ.~.ng
pe:.-iod
in th:.. !lUt1.:ua1 of
l~c;t,
year "nd about the sruue as the seasonal peak reached
::.oJ.~J.
Prices of most basic commodities, tK,th domes-Lie and
riod of 1i ::-tle c ;~aLge
durin~:;:
tLe :.Latter part of Aprll.
imro~~ted,
Pric 2 bcreases
R-835
-4-
were most pronounced for agricultural commodities reflectin'g in part the
prospect of legislation raising Federal loan rates for
bas~c
farm crops.
Prices of a number of semimanufactured industrial products, including
petrolewn products, coke, leather, textile yarns and fabrics, and building materials, also advanced.
Metal prices, now for the most part sub-
ject to Federal control, remained at the maximum levels established earlier.
Bank credit
Bank loans and investments have shown a marked rise since last
summer, the increase at reporting banks in 101 leading cities amounting
to $4,000,000,000.
In April <:tDci early i'&ay holdings of investments by
thase banks increased considerably, mostly at New York City banks, reflecting substantial purchases af newly issued
tion notes.
Reconstr~1ction
Finance Corpora-
Increases in Gommercial loans ir1 this period were somewhat
smaller than during the preceding two months.
Excess reserves of member banks were $5,700,000,000 on May 14.
Since January they have declined by about $l,lOO,OOO,OOO, owing largely
to increases in Treasury deposits vd th the Reserve Banks and in currency
in circulation.
The decrease has occurred entirely at New York City banks.
United States Goverrunent security Prices
Prices of United States Goverrunent securities, which had risen
sharply from April 9 to April 2.1, subsequently declined irregularly through
May 15.
On that date the 1960-65 bonds were
3/4 of a point lower than on
April 21 and about l-1/~ points below the nl1-t1me peak reached on December 10, 1940.
The yield on this issue is currently about 2..09 per cent,
compared with 2.03 per cent on December 10.
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-836
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
:May 20, 1941
Dear Sir:
There is enclosed for your information
a table showing, among other thing&, the number
and aggregat<-:; of deposits of State banks admitted
to membership in the Federal Reserve System during
19/+0 and the first four months of 19hl, together
with a statement containing excerpts from the bank
relations reports submitted by the Federal Reserve
Banks for the month of April.
L. P. BeU:i'ea,
Assistant Secretary.
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
R-836-a
STATE BANKS AD1iiTTED TO FEDERAL RESEHVE MDiBE..L?.SHIP
Federal
Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapol1s
Kansas City
Dallas
San Francisco
Total
-:{~-*
~HH{·*-3HH~
Banks admitted
to
1 membership during
~April 1941
!~er
'Deposits
;
I
!
lI
I
il
'
o
21
3
.
0
(Deposits are in thousands of dollars)
-------~--:---:-Number of noninernber commercial banks vd th sufficient
,
Banks adrni t ted
1
to membership
capital stock to meet the minimum statutory
reauirements for Federal R-eserve membershiP~~
during 1940
Total :
By_ size of de osits
Number
De-p--o-s-it-s----1
Number
1
Under
$1
l$1
10
$10
millions
on Par
Number
_
j ~H~
j million !\millions
and over
List
II.
46,300
0
8
5,200
4
6
3
2,400
25
1,100
1
700
18
3
21
7
108,600
0
0
5,200
62
21
9
402
459
28
I
o
253
29
I
o
174
2
800
182
5,125
194
138
37
II
9
'
-t------+-------+-----i--------+-----+-------+------r---------+----68
171,600 f-lH~-l:-><188
218,317
5,209
4,092
! l,OlO
!
79
3,697
j
l
i
i
1
200
1,100
10
14,197
487
24
4
21,15/+
282
I
!
These figures are as of December 31, 1939, the latest date for which such data have been compiled.
These totals include, and the distribution by amount of deposits excludes, 28 banks v:ith no deposits or
for which deposit figures were not available.
Includes one newly organized bank with no deposits.
Excludes tvvo banks org.r~nizeO to succeed nation2-.l banks, one org~.niz,ed to succeed a State member as pc..rt
of a rehabilitation program, and one orgBnized to succeed a Stc_te member ·whose charter he.d expired.
•
R-836-b
May 20, 1941
Not for publication
•
EXCERPTS FROM BANK R}:LATIONS REPORT~
FOR THE MONTH OF APRIL· 1941
BOSTON
•
With a few exceptions, all banks visited expressed :i.ntention of quali~Jing as issuing agents for defense bonds. The few who
had not intended to qualify as issuing agents propose to place customers' orders with neighboring banks, the local post office, or the
Federal Reserve Bank.
NEW YORK
Columbia, Dutchess, Greene, and Putnam Counties (bordering the
Hudson River}
Deposits of the 33 commercial banks aggrega-te $56,000,000,
of which about 45 per cent is time money, and the savings institu-tions have deposits of $57,500,000. Government obligations make up
more than 50 per cent of the total of securities and most of the
bankers are anxious to increase their holdings further but say that·
they hesitate to buy at existing high prices.
The officers of one institution which has been f innncing
the purchase of automobiles over a period of eight years, state that
they have not yet had a loss.
•
•
..
Another bank has had a substantial increase in its personal loans since placing on the outside of the building a neon sign
advertising this department and the cashier states that they are obtaining business that formerly went to the personal loun companies •
Two rural banks had representatives attend the sessions of the Farm
Credit School, ~ponsored b,y the New York State Bankers Association
at Cornell University on March 10 and 11, and it is believed that
many of the suggestions made there can b~ put into practice and result in more farmers' loans.
Fruit growing is the chief agricultural pursuit in Dutchess
and Columbia counties. The apple growers have received poor prices
during the last two years and in the opinion of m~ bankers their
outlook is not favorable •
•
•
R-836-b
-2-:
•
Genesee. Monroe, and Orlem1s Counties (western New York)
Deposits of the 21 commercial banks have increased slightly during the past six months and now total $258,710,000, of which
$1.39, 797,000, or 54 per cent, are savings or
evidence of the trend toward the acquisition
ties, it is noted that, while six months ago
were comprised of 56 per cent of such bonds,
this has advanced to 70 per cent •
•
•
thrift accounts. As
of Government securithe banks' portf~lios
at the present time
Due to adverse weather conditions last year, the farmers
experienced one of the worst growing seasons on record. The dair,y
situation is described as the one bright spot in a dismal picture,
as milk prices have been maintained at reasonably satisfactor.y levels for over a year.
Bergen County (northeast corner of New Jersey)
Deposits of 22 banks aggregate $1.34,200,000 of which
$77,500,000 are savings funds. The maximum interest rate permitted
on savings deposits in the State of New Jersey is one per cent.
Some institutions have further reduced their interest costs qy not
p~ing interest on very small balances.
United States Government
issues comprise about 60 per cent of all investments.
An innovation instituted b,y one bank is scaled rates on
mortgage loans ranging from .3-l/2 per cent on a five-year plan m1d
running up to 4-1/2 per cent on a twent,r-year plan with monthly,
quarterly, or semim1nual amortization. This new method has stirred
up neighboring bru\kers who are receiving inquiries from some of
their mortgagors.
.
•
•
The Bendix Aviation Corporation, employing about .3,500,
is operating in three shifts. It has recently taken over the
Hackensack Arena in Hackensack (.30,000 square feet of floor space),
has reopened its old Eclipse plant in Bloomfield, New Jersey, and
also purchased the Atwater Kent plant in Philadelphia. In Fair Lawn,
the Wright Aeronautical Corporation has a large plant to which it
has recently added a new foundry. This corporation has also taken
over the buildings of the National Dyeing and Printing Company in
East Paterson •
PHILADELPHIA
•
New Jersey (four southernmost counties)
The resort business during the 1940 season was better than
thut of 1939 and early season activity indicates that 1941 m~ be
the best in many years •
•
•
-3-
R-8J6-b
Asparagus is becoming more important each year and additional large acreages were said to have be~n planted last year. An
acute shortage of farm labor, however, threatens the success of this
crop, which will be ready to cut about May 1, and the probabilities
aro that they will be unable to harvest a goodly portion of this
crop.
•
One factor affecting the amount of' business done by the
banks with the farmers is the gradual acquisition by tho Seabrook
Farms, Inc., either tb.rough purchase or lease, of h1mdreds of small
farms in tnis section. 'I'his large scale farming concern is said
now to own 12, 500 acres and to bG let'.Sing e.n additional 12, 500 acres.
Wa,yne County (northeastern corner of Permgy lvania)
Tlle principal inGome of this county is derived from dairy
farming blld, afJ a re~mlt of more favorable prices for milk, conditions generally are improved as compared with a year ago. Current
prices are somew~1at le;3s than those paid in March, which were said
tu have been at a ten year high.
Real estate ccnditions show little improvement. Many
mechanics h&ve moved to large industrio.l centers where steady employment at highor wages can be obtr,ined.
Northampton Coun t,y (eastern Pennsy bcania, bordering New J ersoy,
includes Br:::thlehem)
•
•
•
•
Slate, Yrhich is used chiefly for roof coverir.g, has not
been able to withstand competition from cheaper and more easily handled materials, c.nd, as a result, employ1:1ent OJ the industX"".r has
declined 40 per cent during the past six years. The cement plr.mts
have been active for the past several years, chiefly because of
lo.rge orders for c(::me~1t used in the construction of the superhighw-ay connoeting Pittsbur3h and Harrisburg. The present activity, wtdch is at peak J.evel, will, according to one be.nker, continue
for f:.t J.ea~~t two ya~~rs because of the clmne.nd crt~ated by the various
needs of the national defense p:rog:::am.
The inclm3tries at Easton and Bethlehem are busy and there
is a great s:10rtr~ge of skilled mechun:Lcs. The largest employer of
labor in this dif;trict is the Bethlehem Steel Company, which is operating 2/._ hours da:i.ly, erHploying 20,000 men, an increase of 8, 000
oV\31' the currBsr,>undin'; period. last ye,;;.r. The influx of workers from
other parts of the State and country has caused o.n acute housing
shortage a.t Bethlehem •
..
•
•
-4-
H-836-b
Milk prices have been satisfactory and the growing of alfalfa, which is increasing in importance, is profitable.
CLEVELAND
•
Generally speaking, the small banks are quite critical of
the position of the Treasury Department in declining to sell Series
F and G bonds to the banks for their own accounts. T!'1is criticism
is quite keen :in areas whe1·e savings and loan associations are competing freely with banks, s1nce such associations are permitted to
buy Series F' and G bonds for their own accounts.
A Kentucky banker, in reply to an inquiry as to what factors contributed to a substantial gain in loan account, stated "personal solicitation". He added that he has learned that a potential
borrower no longer comes to the bank, but that the banker must go
to the borrower.
:~
•
:J:"rom central Kentuclzy- comes a report that farmers in one
county will plant about 1,000 acres of hemp this spring. Some years
ago, hemp was one of the chief money c:c,ops of the State. Following
the Spanish-American war; it wr~s found that Kentucky hemp growers
could not compete with growers in the Philippines, and turned to tobacco as a substitute crop. Increased demand and present diffi~ul
ties incident to shipping have now made it possible to produce this
crop at a profit.
RICHMOND
Maryland
•
•
In practically all sections of the State the farm labor
s:i.tuation is becoming acute, though it is less acute on the Eastern
Shore and in the mountainous areas than elsewhere in the State.
Industries which employed more thm1 twice as many people
in March 1941, thai'1 a year earlier include: electrical machinery;
plumbers' supplies; shipbuilding and rvpairing, and building construction.
Confrcnted with the tightest employment market rmd the
largest Easter sales volume since V'lorld War dr.ys, Baltimore department stores bad to call in hundreds of boys and girls from t-he
schools in the city •
•
•
-5-
R-8.36-b
Virginia
Tobacco beds are in good condition and the supply of plants
will be plentiful. Absence of frost drimage has given a promising
prospect for fruit crops. Both apple and peach blossoms are heav.r,
and the "set" of fruit promises to be good.
•
The duPont :nylon plant at Martinsville, Virginia, now employing 1,100 workers on construction, is reported about 35 per cent
completed. It is expected thnt this plant will be firlished and in
operation qy fall.
•
Production of staple fiber is now getting under way at the
newest and most modern rcyon plant of the Viscose Company at Front
Royal, Virginia. The plant will reo.ch its full capacity of 50,000,000
pounds in 1942.
North Carolina
.,
•
•
ll
•
...
.
The pench harvest wHl be an excellent one if no dmnage occurs hereafter. Cabbage production, indicated at 10,000 tons, will
be well above average. Strawberries are moving to market at prices
above last year's average of $3.40 a crate. Hog pric0s in southern
markets rose notably in April as a :result of the am1ouncement that
the Federal Governmcmt had pegged Chicago pricas at $9.
Defense contracts awarded in North Carolina between March
31 and April26 amounted to $3.3,412,000, which included a.$19,800,000
ship construction contract for cargo vessels to the North Carolina
Shipbuilding Company at Wilmington, North Carolina, and a $13,000,000
contract for construction of Ma:dne Corps training facilities at New
River, North Carolina.
The Wage-Hour Administration's Textile Industry Committee
recorrL.'llendcd on April 15 that a minimum wage of 37-1/2 cents an hour
be established throughout the indust~J as against the present minimum of 32-l/2 cents an b.our. It is ~mid 90,000 workers~-35,000 in
North Carolina and 55,000 in South Carolina--will benefit from the
proposed 5 cents an hour increase.
Reports from 91 cities and towns indicate that the 3astern
third of North Carolina is experiencing ona of it~; best years in a
decade. The Government will spend approximately $~75 ,000,000 in the
section for Army and l,iarine bases tmd other establishments. Eightyfive thousand sr)ldiers and me.rines will be stationed in this area and
their pay will be several million dollars a month. Tho pa;r roll of
men in the armed forc,.;;:s in the ar0a will amount to more than the
value of the tobacco crop in some years •
•
-6•
>
•
R-836-b
ATLANTA
A number of large plants are located in Gadsden, Alabri!ll8.,
including a steel mill, cotton mill, stove foundry, and automobile
tire manufacturing plant. All industries are said to be operating
on a full-time basis.
Banks in southwestern Louisiana serve an agricultural section of the State, the chief product of ~vhich is sugar. The condition of the cane crop was reported as being favorable. The coast
tovms of Morgan City and Patterson are experiencing a favorabl'~ seafood season.
The banks in Hazelhurst and Crystal Springs, Mississippi,
serve an agricultural area ir1 v:i1ich truck f1.rming is the principal
activity. '/l'eather condHions in this area arE. said to have been liDfavor::ble and all crops are expected to be somewhat short.
c:·IICAGO
,,
Seven State banks wer·e admitted to the System, one of these
having depositc of $1.?2,000,000.
Bankers are giving considerable attention to personnel problems at this time. They state that it is difficuU to get trained
clerical help. \':e are also advised that C. I. 0. workers are trying
to organize bank clerks in vnrious parts of the District.
The large Detroit banks report that it has become necessary
to establish some additional branches due either to the establishment
of new industries or to the expansion of existing plants, as the bnnking facilities ha'i'e been overtaxed in attempting to meet pay rolls
and to take care of added business. This concii tion h:ts been aggravated by the demand by the unions that all employees be pniJ on the
same day. Wi tb the 'o;XCeption of the Ford Motor Company, the larger
plants pay by check.
ST. LOUIS
•
Agricultural Conditions
In the section of Kentucky covered, the principal crops
are tobacco, wheat, corn, oats, legumes, hay, fruits, and vegetables.
Since April 1 there haG been abundant precipi ta.tion a...'1d more seasonal
temperatures, which have materially assisted winter whe.::1t <J.nd other
growing crops. Prospects for fruit are r:.::ported the best since 1931.
225
•
-7-
•
•
•
R-8'36-b
Agricultural conditions in Indiana counties Vi3ited were
described as goorJ to excellent. RAserve stocks of feed grains and
i'odclE.r on farms are gei."lerall;t adequate to carry livestock past the
next. crop harvests. 1.'he Indiana s·upply of' farm labor is reported
at 72 per cent of norm.al, the lowest supply in the last decade. The
increased mechanization of agriculture will largely offset any labor shortage. Average wages to farm_labor are about 10 per cent
greater t:v:m a year ago •
Irhiustry and Trade
In all sections of Kentucky rmd Indiana visited conditions
approximatint.; those of boom periods prevail. There is less tmemployment than in a number of years, and :1 shortage in some skilled
trades is evident. It is estimate~i that the Gilbertsville Dam (T.V.A.
project) monthly pay roll c-unou...Ylts t.o about ~i·.30U,OOO. T.V.A. has purchased Gil-oertsville and is constructing a ne-w morolel tom1 two miles
west· of the present site. .Much gvod farm l.rmd will be lost when the
~)12,000,000 dam is completed.
The surrounding cotmtry :vil1 become
largely a recreational area.
Bankinr- Comii tions
•.
One Jeffersonville bank has a.n agreement wl.th the du Ponts,
through a LouisvLlle bank, to cash du Pont checks, imposing a charge
of five cents each against the du Pont interests. About 1,000 checks
are cashed each week. At Sellersburg, Indiana, also near the Charles:t.ovvn powder plant, one D''Xlker sc.>.id he keeps his banL open every other
Friday nit;ht to cash pay roll checks, ma.king a charge of ten cents on
each i tern. This charge is 11ot a.baorbed by the Ci.u Pont interests.
b,1l'JNEAPOLIS
••
...
..
•
Minnesota ( southwe::;t corner)
\iV0rthington is the turkey ro.ising capitaL Boote's hatchery, well knm'<n t:) us because of a l3b loan nmr ?aiel, has constru.cted a new building ,-:..nd its incubators CO'Ttained over a million eggs
the day it was visited; npproximatel}' half were chicks ani t-:a.l..f Lurkeys. iJ1ost of the turkey ee;gs ar"~ 2hi_t:\)ed j_n from Texas and CE.lifornia.
unv1ng west on llighway No. 14, nine banks were visited •
The new defense saving3 bond posters we:::·e not on display in .<my of
these banks. A banker in one of 7,he to-::ms said that b:; was afraid
to put up the sign because of the sentii.wnt over a large part of the
cornmu.nit.y. Another banker mentioned a.Lso that he hc5i tated about
226
•
-8-
R-836-b
displaying the sign a.'1d issuing the savings tends. One banker said
that the idea of defense bonds was not popular in his town and he
had not yet asked for a consignment of those bonds.
'
Jvlinnesota (east central)
Interest rates charged by tQe banks range from 5 to 6 per
cent on farm loans and 7 to 3 per cent on chattel mortgage and accommodation loans. Virtually all the bankers are lookir.1g for an additional outlet for their funds which will provide safety and a good
return.
•
.
""
There is some ccncein over a privately operc.1.ted credit association at St. Cloud which bankers feel is making inroads on business that legitimately bel0n15S to the banks. In part of the terri tory
visited, it is asserted that individuals are lending money directly
to other indi vidua.ls at rates lower than those quoted by the banks •
The granite industry is active in a portion of the territory visited, and the leading granite cor,1pB.i1.Y is working twenty-four
hours a day. Bankers in this area feel this is a natural situation
filld stated that when people had more money to spend they were inclined
to purchase cemeterj" monu.'Mnt.s and other IJroducts manufactured by
these companies.
Minnesota (south central)
This section of Minnesota. can be classified as one of the
best diversified sections of the State ru1d crop failures are unknown.
Considerable cattle feeding is done.
•
The nonmember banks charging e.iCChange said that their revenue from this source has avern.ged from 7-1/2 to 10 per cent of their
conunon capital, which ooviousl;l is a definite bar to membership. If
exchange vvas not a bar to membership, nearly everJ banker visited who
could q,ualify would iLi!Ilediately apply for membc:.~rship.
North Dakota (southeastern and central sections)
Where wheat formerly was t~:e principal product, farming is
now varied, and farmers are raising turkeys and other poult.F.f in
b.rge qur..r.ti ties 11nd receiving a moderrtte income from eggs. They
also generally i·ecei ve weekly cream checks. Corn has replaced wheat
in many fields. Sheep that are being shipped in do not do well the
first year, becnuse it takes about n yeD.r for tl1em to become acclimated.
Bankers seeJned soraewhat concerned over the fact that they
cannot purchasr:' United States Savings Bonds, F and G series. They
•
•
-9considered it unfair to be expected to sell bonds for the Government
and not be permitted to buy. Sw.e bankers, especially in small communi ties, do no·c intend to apply for application to sell savings
bc.nds, and they will refer purchasers to the post office.
KANSAS CITY
Conditions were reported to be favorable, with more than
the usual amount of moisture in a large part of Arizona and western
New I,:exico country, resulting in excellent pasture conditions for
this time of the year.
'
In the extreme eastern part of Nebraska, arr)und Nebraska
City and Falls City, much damage to the orchards was :::·e~orted due to
the early freeze last fall. In the southwestern part of the State
aro1md :McCook, where wheat is the princip<:d crop and where they have
not had a crop for some time, prospects were reported very favorable.
Prospects for a heavy fruit crop in Oklahoma are excellent.
Oklahoma City has been av1ardcd by the Government an airpla.'18 repair d.epot to cost ·approximately :;:16,000,000. The depot will
employ approximately 3,500 civilians and 350 officers and enlisted
men will be stationed there.
DALLAS
.
.
Banks visited in North Texas, where the livestock industry
furnishes the principal source for loans, are reluctant to advance
funds to purchase cattle in view of the abnormally high prices prevailing in the cattle market at this time.
Prospects for feed and small grain crops are unfavorable
.'lt this time due to excessive rains. Some insect dam::tge to wheat
and oats wt,s reported and it is feared that the crop will be short
unless dry8r weo.tber prewdls· during the next ti1irty days.
SAN FRJ\.11JCISCO
Crop prospects tn eastern Oregon are excellent. The normal
number of livestock are on the range. However, there has been a
switch away from sheep to cattle •
•
•
•
R-836-b
-10PUBLIC RELATIONS ACTIVITIES OF FEDERAL REShRVE BANKS
April 1941
•
•
•
•
~
Federal
Reserve
Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
-r--·
Visits to Banks
Addresses l,1ade
\ Meetings Attended
Member I Norunember I Total! Number l Attendance Number !Attendance
22
77
40
90
62
167
127
261
69
152
109
34
36
h7
27
45
119
131
19
47
38
254
30
6
385
13
51
58
15
3
81
63
18
164
49
53
3,554
2,847
2,800
JJ
2
5
9
7
550
2,547
177
1,270
1,8001/
962
2,074
0
4
2
5
0
265
900
721+
209
2,551
965
1,817
7
l
4
751
50
360
1,046
3
13
9
9
ll
8
3
10
it
13
8
16
:\
-. I
d:.t
•
.
•
ilot completely reported.
9
300
•
BOARD OF GOVERNORS
~30
OF' THE
•
FEDERAL RESERVE SYSTEM
R-837
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
T.D THE BOARD
•
May 20, 1941 .
•
•
Dear Sir:
•
•)
There is attached £l copy or the report of expenses of tile m&.in lines of the :B'ederal Reserve Leased Wire System for the month
of April 1941.
Please credit the amount payable by
your Bank to the Board, as shown in the last
colunm of the statement, to the Federal R~serve
Bank of Richmond in your daily statement of
credits through the Inter-dh:trict Settlement
F'und t'or tho account of the Board of Governors
of the Federal Roserve Systen1, and advise the
:Fe:Joral Deserve Bank of Richmond by mail the
amount and purpose of the credit.
Very truly yours,
•
J
0. E. Foulk,
Ji'iscnl Agent.
Enclosure
..
TO PRESIDENTS OF ALL FEDERAL RESERVE BAi!:{S
EXCEPT RICEI.iO:ND
•
•
~3f
R-837-a
•
•
REPORT OJ!" EXPENSES OF i.\1AIN LINES OF :E'EDERAL RESERVE
LEASED WIRE.SYSTEIVI FOR Tiu; lv:oNTifo:F APRIL. 194:;-
Federal
Reserve
Bank
_5os ton
Number
of Words
Sent
v:ords Sent
Total
by N. Y.
Words
Chargeable
to other Cha::cgoF.R. Banks able
Pro Rata
Share of
Total Expenses (1)
$.
580.83
1,355-56
371.52
635.93
Expenses
Patd
by Banks
and
Board (2)
-----¥
~-
339.27 $ 241-56
866.98
488.58
12?.07
21~4·45
379.00
256.93
33,093
78,020
337
York
Philc:ldelphia
Cleveland
21,041~
36,262
339
339
33,430
?8,020
a,383
36,601
J.ichmond
.H.tlanta
Chicago
;3t. Louis
L.3,036
lt5 ,12'7
71,724
48,442
338
338
378
338
i.r3, 37/l.
4.5,465
?2,102
;;.8, 780
753.60
789.94
1,252.7/+
8L.7. 53
31;.1.18
233.87
1,281.23
238.19
...
··un..rteapolis
~:ansas City
:Ja1les
;3c;.n Francisco
21,173
40,91,8
39,060
55,755
337
338
353
339
21,510
41,286
39,1,13
56,094
373-73
71'7.33
68L~. 78
974.61
185.06
273.01
326.40
427.13
-•
Board of
Governors
339,386
339,386
5,896.68
10,221.08
Total
873,070
876,844
$15, 23L,.• 78
rkw
•
•
3,774
Payable
to
Board
of Governors
412.1t2
556.07
28.49(a)
609.34
188.67
4Lt4• 32
358.38
547-.!,.8
$15,234-78 $4,352.89
28.!:J:2(a)
~$4, 324-40
Based on cost per word
( 2)
Payments by Bo.nks ere fo:r persone.l services and supplies and pa;y-ments by tho
Board are for personal services and supplies (:$1, 211+·43) t.md wire rental
(~~.:9,!+30.00) less amount (<~;Li23.35) reprcsenti:ag reimbursement :t'or the .cost of
sending messages between the Washington o:ffice of the Leased l\Tire System and
the local telegr::.cph offices of the Treasury 1 Reconstruction Financo Corporation, and the Commodity Credit Corporation. Personal services include so.laries of main line operators and of cloric:J.l help engaged in v10rlc on main line
business, such as counting the number of wcrds in mensc:.ges; a.lso overtime and
supper monoy and Retirement System contributions at the eurrent service rete.
' ·'1)
I"'·
Credit - Reimbursable to Chico.go.
..
•
(~;;.017374561)
( 1)
for business handled during the month.
•
•
R-838
•
BOARD OF GOVERNJP.S
.QLTHE
FEDERAL RES&LVE SYSTEM
•
Statement for the Press
•
For iwnediate release
•
];;~a.y
29, 1941
The Board of Governors of the Federal Reserve System
today announced the appointment of Mr. Frank D. Jackson, President of the Jackson Grain Company, Tampa, Florida, as a director
of the Jacksonville Branch of the Federal Reserve Bank of Atlanta
for the unexpired portion of the term ending December 31, 1943.
The Board also announced the appointment of Mr. Lloyd
•
Noble, President of the Noble Oil Company, Ardmore, Oklahoma, as
a director of the Oklahoma City Branch of the Federal Reserve
Bank of Kansas City for the unexpired portion of the term ending
•
'
~
December 31, 1942 •
..
•
•
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
•
WASHINGTON
R-839
ADDREBB DF'F'ICIAL CDAAEBPDNDENCE
TD THE BOARD
•
May 29, 1941
•
Dear Sir:
For your information there is enclosed here-
•
with a
COP.Y
of a statement used by the Board's General
Counsel in testifying recently before a subcommittee
of the Senate Committee
on the Judiciary regarding
three pending bills to reform the procedure in the ex-
•
ecutive departments and administrative agencies of the
Goverrunent •
•
It is sent in this form because it has been
learned that it will be some time before the reports
of the hearings will be published •
•
J
Ver:J
truly yours,
..
Chester Morrill,
Secretary •
•
Enclosure
LETTER ·ro THE CHAIRiYIEN AND PRESIDENTS OF ALL FEDERAL
RESERVE BANKS MD MEMBERS OF THE FEDERAL ADVISORY
COUNCIL.
(Enclosure with address'ed copie:s only)
R--840
..
•
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
•
•
STATEMENT FOR THE PRESS
For immediate release
June 4, 1941
The Board of Governors of the Federal Reserve S,ystem today announced the appointment of Mr.
Walter H. Lloyd, Jr., editor of The Ohio Farmer,
Cleveland, Ohio, as a Class C director of the Federal Reserve Bank of Cleveland for the unexpired
•
•
1
•
portion of the term ending December 31, 1941 •
BOARD OF GOVERNORS
R-8hl
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
•
June !~, 1941
.
•
There is enclosed for your information
a copy of a letter da.tec! May 26, 19~-1 received
'
from
~rr.
Roger
c.
Wilde, &pecial Assistant,
Defense Contract Service, with respect to a circu~ar letter (copy enclosed) sent out by the
Federal Reserve Bank of Richmond on Lay ), 191!_1.
Very truly ;y-ours,
•
J--
Jat-,.~
Ernest G. Draper
Enclosures 2
TO TEF FRESID:Cl''I'S OF ALL FIWF,PJJ.L FJ•:SfoRV1 BANKS
EXCEPT RICE!~OJ:,,D
•
( CIR.CULAR 1'!\TCLOSUP.F WI'J'H ADDF.BSSE1J COPIFS OFLY)
•
c
0 p
y
R..P.l•la
•
OFFIC" r.!' PPODPC'J'IOr 1v'fJ1 l!AGEl FNT
Social Security Building
Washington, D. c.
•
May 26, 19L'l
..
Governor Ernest G. Draper
Board of Governors
Federal Reserve Board
Washington, D. c •
•
Dear Governor Draper:
..
I am attaching a copy of a circular letter,
ND 5, which wa.s sent out by the Federal Reserve Bank of
Richmond on May 3, 19hl •
...
•
This circular contains int.::rostinp- inform:,tion
about the organization and p6rsonn.el in the Dofcns0
Contract Service offices in the Fifth Foccral Resc·rve
District anc'l is an c:xce1lcnt form of pvblicity. For that
reason I would like to sug[ost tha.t you might serd copies
of this circular lcttrr to the presidents of tho other
cloven Federal Rc;scrvo Bo.nks vri th the suggestion that
they might want to sond out a similar circular letter to
the com."norcial bc.nks in thci r districts.
Vory truly yours,
•
.1
(Signed)
Roger
c.
Wilde
Roger C. Wilde
Special Assistant
Defense Contract Service
•
Enclosure
...
• for FRASER
Digitized
•
•
R-8/.;.2
BOlli\D OF
•
GOV~~
OF THE
FEDERAL
RES&~VE SIST~li
S'il'ATEMENT FOH THE PRESS
..
For irmnediate release
June 6, 1941
•
The Board of Governors of the Federal Reserve
&Jstem today announced the appointment of
E. Paul, a member of the law firm of Lord,
~~.
D~
Randolph
& Lord,
New York, New York, as a Class C director of the Federal
•
Reserve Bank of New York for the unexpired portion of
the torm ending December .31, 1943 •
•
_J
..
•
•
•
R-843
BOARD OF'
GOVEF~ORS
OF~
•
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For immediate release
June 11, 1941
•
The Board of Governors of the Federal Reserve
System today announced the appointment, effective July 1,
1941, of Mr. Winfield W. Riefler, Institute for Advru1ced
Study, Princeton, New Jersey, as a Class C director of
the Federal Reserve Bank of Philadelphia for the unexpired
portion of the term ending December 31, 1941 •
•
.."
...
•
BOARD OF GOVERNORS
R-844
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
•
June 13, 1941
Dear Sir:
•
There have been forwarded to you today
copies of form F. R. 107
under separate cover
to be used by State bank members in submitting their
reports of earnings and dividends for the six months
ending June 30, 1941.
The form is unchanged from the
one used in submitting reports for the six months
..
ended December 31, 1940 •
J
S. R.
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
-BOARD OF GOVERNORS
;r;40
OF THE
•
FEDERAL RESERVE SYSTEM
R-845
WASHINGTON
ADDRESS OF'F'ICIAL CORRESPONDENCE
TO THE BOARD
•
June 17, 1941
Dear Sir:
•
..
There is attached a copy of the report of expenses of the main lines of the Federal Reserve Leased Wire System for the month
of :'flay 1941.
Please credit the runount payable cy
your Bank to the Boa:::-d, as shown in the last
column of the statement, to the l''ederal R.eserve
Bank of Richrnond in your daily statement of
credits through the lntercijstrict Settlement
Fund for the accmmt of the Board of Governors
of the Federal R.esercre System, and advise the
Fedencl Reserve Bank of IU.chraond qy mail the
amount and purpose of the credit.
Very truly yours,
j
_/
91dl~
0. E.
_oulk~
Fiscal Agent.
Enclosure
TO PRESIDENTS OF ALL FEDERAL R.ESERVE BANKS
EXCEPT RlCfl.HOIW
...
'
R-845-a
..
}rEPORT OF EXPENSl-::S OF: Ml\.IN kl!'JCS OF FED.>;;RAL RESERVE
LEAS:CD WIRE S'I STE£,1 FOR THE MONTH OF Nl1IY 1941
Federal
Reserve
Bank
Nu;·nber
of Words
Sent
Words Sent
by N.Y.
Chargeable
to Other
F.R. Banks
-
..,_
Boston
N9W York
Philadelphia
Cleveland
34,45/+
07,767
2) ,678
.39,586
391.-
396
396
391,.
391..
438
396
22,910
44., 704
43,205
56,897
377.23
736.09
711.1..1
936.86
185.06
2'7.3 .Ol
326.///"
418.72
351.. ,686
5 ,81+0 .22
10,355.32
932,J..,J..,.9
$15,353.59
22,516
44,310
1..2, 767
56,501
Total
928,013
273.86
871.03
241.17
327.42
39/t-
.
351.-,686
573.80 $
1,.41.-5.16
429.33
658 .31"
335.78
236.03
1,21..1.39
268.33
394
394
Board of
Governors
~
't!'
818.09
789.99
1,210.70
826.37
49,290
47,58.3
'73 ,082
1;.9, 793
~·Jinneapolis
31+,848
87,767
26,071,.
39,982
Expenses
Paid
by Banks
and
Board (2)
Pro Hata
Share of
Total Expenses (l)
49,684,
47,97?
'73,528
50,187
Richmond
,. Atlanta
Chicago
St. Louis
Kansas City
Dallas
San Francisco
Total
Words
Chargeable
446
4,436
....
Payable
to
Board
of Governors
~~
'I?
299.94
574.13
188.16
330.92
482.31
553.96
30.69(a)
558.04
192.17
463.08
384.94
518.14
$15,353.59 $4,545-79
30.69(a)
$4,515.10
(l) Based on cost per word ($.0161.,.65876) for business handled during the month.
(2)
Payments by Banks ar<:; for personal services and supplies and payments by Board
are for personal services and supplies (:~:1,157 .98) and v:ire rental ($9 ,611.97)
less amount ( $411~.63) representing reimbursement for the cost of sending mes-sages between the Washington office of the LBased Wire &Jstem and the local
t0legraph offices of the Treasury, Heconstruction Finance Corporation, and the
Commodity Credit Corporation. Personal services include salaries of main line
operators and of clerical help engaged in work on main line business, such as
cou:nting the number of v10rds in messages; also overtime and supper money and
Retirement System contributions at the cu.rrGnt service rate.
(a)
Credit--reimbursable to Chicago •
•
BOARD OF" GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
•
R-846
WASHINGTON
ADDRESS· DF'P'ICIAL CDRREBPDNDENCE
TD THE BOARD
June 18, 1941
Dear Sir:
On Friday, July 4, the offices of the Board of
Governors of the Federal Reserve System and of Federal
Reserve Banks and branches will be closed in observance
of Independence Day.
The Board has also been advised that holidays
will be observed in the month of July by the following
offices:
July 14
(Monday)
..
24
(Thursda;y)
July
Nashville
Memphis
In Observance of
General Forrest's
Birthday
Salt Lake City
Pioneer Day
On the dates mentioned the offices concerned
will not participate in the transit clearings through
the Interdistrict Settlement Fund. Please include transit clearings for the offices affected on each of the
holidays with your clearings for the fQllowing business.
dey. Please notify branches.
Ver,y truly yours,
,-~:::~n/~
~.~~A.
Nelson,
Assistant Secretary.
TO THE PRESIDENTS OF ALL FEDERAL HESERVE BANKS
.
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-847
WASHINGTON
ADORES& OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
June 18, 1941
..
Dear Sir:
The present distribution of Bulletin reprints to the Federal Reserve Banks is based upon
replies to
Mr~
Morrill's letter of June 8, 1940.
We are revising this mailing list and
should like to know whether the use
..
nk~de
by your
Bank of the reprints would suggest a change in the
number of' copies of each new reprint that should
be sent to you as a matter of routine and, if so,
the number you would like to receive.
Of course,
additional copies may be requested at any time.
,,
Assistant Secretary •
..
•
TO THE PRESIDE"NTS OF' ALL FEDERAL RESERVE BANKS
BOJ'.R.D OF GOVERNORS
OF THE
r~ED:sRAL R~?m
STATFJvlEI~T
For release in morning papers,
Friday, Jvne 20, 1941
..
•
SYSTEM
FOR TnE PRESS
The following summary of general
business and financial conditions
in the United States, based upon
statistics for Mey and the first
half of June, will appear in the
July issue of the Federal Reserve
Bulletin ~id in the monthly reviews of the Federal Reserve Banks.
After a slight decline in April industrial activity increased
sharpl:l in May and the first half of June.
Vfuolesale com.'Ilodity prices
shov;ed a further considerable advance and retail prices also increased.
Distribution of commoditit=;S to consumers was iaaintained in large volume.
Production
-
Volmne of industrial output increased sharply
L~
May, follow-
ing a decline in April, and the Board's seasonally adjusted index rose
to 149 per cent of the 1935-1939 average, as compared with JJ+O in April
and 143 in I'.'larch.
..
The decline in April had reflected mainly reduced
output of bituminous coal and automobiles occasioned by shutdov•i!lS accompanying industrial disputes.
These were settled during the month
and in May and the first half of June output in these industries rose
.,
to the high levels prevailing earlier •
~
In a number of other lines activity increased steadily
throughout the spring months, particularly in the machinery, aircraft,
•
R-848
-2-
and shipbuilding industries.
Steel prod·J.ction was maintained at 99
per cent of capacity, except for a short period dm·ing late April and
early May when output was reduced somewhat owing to a shortage of coal.
Output of nonferrous metals also continued near capacit"J; deliveries
of foreign copper in May increased to 49,000 tons, amounting to about
Ol~e-third
..
of total deliveries to domestic consumers.
Toward the end
of the month, as it became apparent that combined militai"J and civilian
need for these metals would soon greatly exceed available supplies, a
•
General Preference Order covering all iron
~1d
steel products was is-
sued by the Priorities DiviRion of the Office of Production
~,lanagement
e.1d in June manc_atory priority controls were established for copper
and zinc.
Textile production rose f'urtb::n· in May, reflecting increased
activity at cotton, wool, and rayon mills.
A continued rise in output
of manufactured food products was likevdse reported and activity in the
chemical and shoe lndustries was maintained at earlier high levels,
although usually there h a considerable decline at this season.
•
Petroleum production increased, and output of &1thracitG also advanced
following some curtailment in April.
..
r::.~on
ore shipments amounted to
11,000,000 tons in May, a new record level and neur the shipping capac-
ity of the present Lake fleet.
Value of construction contract awards rose sharply in Ma:l,
reflecting increases in both public and private construction, according to F. W. Dodge reports.
•
Awards for private residential and
R-848
-3nonresidential building increased. r;;or•c;
t~mn
seasonall;f, and contracts
for defense projects continued in large volume .
.•
Distribution
Distribution of commodities to consumers was sustained at a
h:'..gh level in May.
Department store sales showed a further rise,
while sales at variety stores declined
seasonal amount.
bJ' slightly more than the usual
Retail sales of new automobiles continued at the high
April level and sales of used cars rose further.
Freight-car loadings increased sharply in Hay· 9 reflecting a
marked rise in coal shipments and a further expansion in loadings of
miscellaneous freight.
In the first half of June total loadings were
maintained at the advanced
leve~~
of other recent weeks.
Commodity nrices
Whc·lesale prices of a number of agricultural and industrial
commoditiE;S showed further increases
.•.
f'l~otrl
the aiddle of May to the
middle of June r..nd t!-le general index of the Bureau of Labor Statistics
adve.nced two points to 87 per cent of
t1~1e
to limit price increases was extended
·~o
pally new automobiles,
1926 average.
Federal action
sone consumer goods, princ:L-
and certain cotton yarl1S.
In retail
markets prices of most groups of commodities have advanced, reflecting
• •<
in part increases in wholesale prices E'arlier this year.
Bank credit
Commercial
loc-:~ns
c;.t reporting banks in 101 citif;S continued
to rise during the four ·weeks ending June 11.
•
Bank holdings of United
-4Sto.tes Government securities increased further, chiefJ..y through the
purchase of bills by l!ew York
other leading cities.
C:it~r
banks and of bonds b-y- banks in
As a result of the expansion in loans and in·-
vestments bank deposits continued to increase.
United States Government securii{r prices
Following a rise in the latter part of May Treasury bond
prf.ces declined slight:L;y- 4'1 tne first iwlf of June.
On Jnne 14 the
lS'60-65 bonds vrere 7/8 of a point below the all-tir'le peak in pricGs
of December 10.
Yields on both taxable and tax-exempt 3- to 5-year
notes doclinod slightly from t nc middle of
•
\
•
.•
•
I1~ay
to the middle of June •
BOARD OF GOVERNORS
CF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
R-849
ADDAEBB DF"F"ICIAL CDAAEBPDNDENCE
TD THE BDAAD
June 19, 1941
Dear Sir:
There is enclosed for your information
•
a table ahow:LTlg, among other things, the number
•
and aggregate of deposits of State bru1ks admitted
tu membership in the Federal Reserve System during 1940 and the first five months of 1941, to-
\
g0ther with a statement containing excerpts from
the ·bank relations reports submitted by tb.e Fed-
a
eral Reserve Banks for the month of Ma;v.
Very truly yours,
~~
L. P. Bethea,
Assistant Secretar,v •
•
Enclosures
TO THE
•
PRESIDl;.~TS
OF ALL
FJ.<~DEP..AL
RESERVE BANKS
R-849-a
STATE BANKS ADlviiTTED TO FEDERAL RESERVE ivill>l:BERSHIP
thQusand~i__Qf_gpllarsl_
____
~ber of nor.m~mber commercial banks >vi th sufficient
capital stock to meet the minimum statutory
Federal
__ _reoui_remepts for Federal Reserve membf:rship>< _
Reserve
District
Totc:.lJBy size of del?osi ts
Number
$1 - 10 l$10 millions
on Par
Number j Under $1
Number
Deposits
-~~-----·_IriJjiOI:t.
__
,
mi1Jions
and
over
List
---------+---t-------------+----+-------(Deoosits
-----.-----'-""--"'=
Ba.11ks adnli t ted
to
membershi;> during
Jan. -- May 1941
Number! Deposits
Boston
New York
Philadelphia
Clevela.11d
Richmond
Atlanta.
Chicago
St. Louis
Minneapolis
0
24
5
7
5
1
24
8
0
-r.~H(·
~H~-jt4 HH~-~f-
0
a
1
21
13
45
76
101
87
126
108
475
394
484
327
301
415
139
86
65
6
7
2
I
1,219
664
420
1,008
200
78
27
10
3
I
28
29
37
0
9
_.___1_,o_1_o
79
25
18
3
37,595
21,868
5,298
110,272
6,070
0
62
21
9
74,483
12,412
10,382
I
578
391
14,197
21,154
5,125
~HHH~J..88
I
141
224
225
4,390
2,184
700
183,909
I
12,026
3,777
8
4
1,100
800
1·
I
I
!
51,515
6,678
200
80
I
J
' 1
0
0 I
Kansas City
Dallas
San Fra.ncisco
Total
are in
Banks admitted
to membership
during 1940
l2H~,317 __ j 5,2~~-4,09~ _
0
0
141
224
225
l
1
-1
1
474
232
52
1,079
434
78
402
i~~
3,697
I
These figures are as of December 31, 1939, the latest da.te for which such data h;we been compiled.
These totals include, and the distribution by amount of deposits excludes, 28 banks vvith no deposits or
for vrhich deposit figures were not availe.b1e.
Includes one newly organized bank V\_;·ith no deposits.
Excludes tvro bar1ks org~J.,niz ed to succeed nationc~.l b311ks, one organiz0d to succeed a State rnerabF:r as part
of e. reh.:<.bilitation program, and one organized to succeed a State member whose charter had expired •
•
"
•
..,
•
~5U
R-81"9-b
<Tu.ne 19, 19!~1
Not for pub1ic<:ttion
EXCERPTS F]3QM BANK ::tSLATIONS rtEPOP.TS
,EQ.:"t TrE: MONTH 0? M.f.Y. ).9~1
BOSTON
OnLy m~,e community in Vermont is directly affected Ly industrial activity incident to the defense p:cogre"m.
"
Outside of a few of the larger communities, bankers reported
little or no activity in the sale of defense brmds. Bankers believe,
howevc:r, that folloveing the semiannual intt>rest date savings bank depositors will increase th0;ir bond pt.rrchases.
NEW YOEK
•
So:nerset and Union Cour.ties. North Cer:.trc..l New Jersey
All banldng inrotitut.ion;3 in these counties are cooperating
• • •
L1 the program of sellin::; Uni tc;d States Defense Sr::.vings Donds.
Many of the banks in this krri tory have instalL>d r>. photo..:.
graphic system of handling checks r,nd several have" been forwarding their
out-of-tovm it;';;JmS to their city corr:aspondent vdtb.out the description
we require. Ti1o officers of some of t.bose banJ:.:s indicn.te tr~::tt their institutions w:l.ll return to their p:;.·Gvious pru.cticc of f::ll'Yiarding checks
to us &s soon ae we aro in posi tLm to accept thern without description.
.
)
•
One large trust company (dor-<:-sits ~~15,\JOO,OOO) has filed an
application for mor:;bership witnin the lr,st rwnt.h •
The Charnber of Co:'!morce in PlainfiGld ~ontinues to receive
inquiries from ccncorns which v;ould lilw to loca to in the Plaicfields,
but industrial space is not available ••••
PlllLADELPHIA
...
The 8..nthraci te mines, while at present experiencing seasonal
in!l.ctivity, have ~;een busier than for sever2.l years r~nd are expected
to resume operations on a lc.;.rger scale than at present when tLe su1n1:cer
price schedule is fixed. However, or'e ba;1ker stated t{m t th~:>. minerr3
have worked only an averv.ge of 150 de;ys a ~"er.:.r since 1931, 1Hhicll is
insufficient for prosperous tiwes in the; mining district •
•
25i
-2-
CLEVELMD
Series E defense bonds are not being sold in the volwne that
had been hoped for. In many corilmunities the reason has been stated to
be "lack of confidr::mce"; in others, "lack of negotiability".
In two Ohio River cotmtias, just outside Cincinnati, not a single nonmember ba.TJ.k llas qualified.
ln several other instances where
bcmlcs ho..ve qualified, they r;:;port no salr::s, fe..,.r or nD inquirias .•••
In a section (northern K0ntucky) from which many reports of
CoEpctition of Government lending agencies h<W~) been racuivud, it is
report0d that the bm;.ks in the principal city have an agreement to
charge borrowel'S a flat 6 per cent rate. While loan totals have been
holding fa:i.rly well, opportunities to make good loans are being lost,
and the more desiro:ole borrowers are going elsevrhare •
•
RICHMOND
Maryland
•
Seu foods have been in abundence this year. The oyster season just closed has been the most profitable in the past trrenty years
The timber indust:r;,r on the Eastern Shore has begun an intense
revival, after a decade of dormancy, under the influence of the national defense program and a resulting tripling of prices. Local timber is
used principally for piling •
•
.
I
Virginia
Timely rains last weelc, which were distributed fairly evenly
over the whole of Virginia, caine just in time to save the crops of the
State from being a total loss.
West Virginia
•
Frosts in tho second week of Ma,y, and subfreezing temperatures caused a great deal of dar.1c.ge to West Virginia gFl.l'den crops ••••
Tom::ctoes v;ere reported to be ruined, while corn ancl potatoes suffered
heavily. Grt:.pes were 11 wilted" by tho killing frosts.
The recommendation of the National Defense Nlediation Bo~:;rd
that the 40-cent wage differential be eliminated between northern and
southern mines Ed'fects only t1wse workers paid b"J the day who ha...'ldle
timber, lay tracks, and handle hoist~, <:~nd those who work on the
•
-3surface outside, while the bulk of the men -.vho are paid r.JY the ton are
not affected since tmmage differential of 15 cents is to remain in
effect.
Horth Carolina
Crops that will bring farmers ;.1illions of dollars in the
fall were saved b<J the rainfall at t'ho turn of June. Tobacco and
corn plants i'lere on the verge of wilting when ths rain set in.
The NortJ1 Caroltna pee.ch crop, indicated at 2,L,JO,OOO
bushels, will be the largest in ten yean; and ~n per cent higher than
last year.
Mach:inGry· compa.nic)S selling equipr,mnt for textile mills aro
in man.y cases sold ahead into noxt year. Textile mJchiner;;r concer·ns
;.:;a;y SO!M:.., Lc;xtile mill<> are complc-;ting modernizatic·n progra~as. In the
first fear ir.tonths of the cu:crent year there have been nine new textile pl.antE e~;tablished fu'1d thirty additions to those already existing. New hosiery nillo conr3ti tuted a larg·~ i tern in each.
•
'
•
I
•
8outh Carolina
The Pee Dee Experiment Station reports z.:.n extrao:cdinarily
heavy boll weevil iYJ.f'estation in the making; the winter war.; mild-just the kind of' winter boll vmevil like.
Production this yec:.r of J ,315, 000 bushels of pec.ches makei3
South Carolina the third ranking peach State in tlw riatio:·1. Thif~ is
by far Ute largest crop of peachos ov8r' produced in the State.
Twenty-three banks in Southern Alabama were visited during
May. iVlost of these banks are lo:::ated in strictly agricv.l tural ar·e3.~;
in whieh cotton is the principal money crop. Diversification of agricultural crops has been e'1courc.gecl qy- bG.nkers in this :5ection during
receD.t years m1d there hu.s alsc been considerable dtwelopment of the
livestock :indust~J. Peanuts, st!·awberries, corn, Irisn potatces, and
hay are now produced c1ui te extero.s:ively ••••
CHICAGO
•
.~
Se.les of' dei'8nse savin:;s bonds to dc::te (Jrule l) approximate
divided:
~65,000,000J
252
-4Series
Series
Series
Of the ~10,000,000 of E bonds,
were m.arl.e by issuing agents of
trict.
R-849-b
G - ~44,000,000
F - ll,OOO;JOO
E - 10,000,000
approximately $7,250,000 of these sales
which there are about 1700 in this dis-
In response to the Treasury's telegram asking for comrnents
proposea tax anticipation certificates, investigation indicates on:y
~ mild degree of interest at this time.
The smaller taxpayers are not
yet aware of the hea'JY increase that will be made in taxes i.ind there
vrould probc<.bly be only a Umi ted demand for the certificates from this
group without a publicity campaign. This might de"trr.wt public a.ttention from Savings bonds and tend to confuse the general public by adding one more type of Government security; furtherrnore, that this type
of taxpayer would probably not be interested in the certificates emless they brm1ght a yield comparable to savings account interest which
in this district runs from one to two per cent. With reference to the
large taxpayers, it was suggested the amount of t:1e certificates be
increased to $10,000 maximum with a rate of l/2 per cent interest.
0n
..
•
.
I
•
.
'
•.
Increases in prices for agricultural products, substu.ntial
gains in the building materials industry, restoration of steel production to capacity levels, resumption of coal mbing, record sales of
autrm1obiles, continued advane es in trade, both wholesale C:Lnd ret3.il,
and a sustained demand for cor.unercial loans featured <:1cti vi ty in the
Seventh Federal Reserve district during tJJ.ay.
Prices for most
agricultural products moved up durinr, M.:w. Grain producLs were particularly strong, out this was onl;:v a natural reaction to the anticipc:.ted passage of the parity bill. By mid-May, corn prices were the
highest they have been since 1937. • . • Cheese prices were at the
best, levels since 1930. • • • Production of American cheese in Wisconsin was up 6 per cent over last yee.r. Hog prices, which were being
supported at $;9.00 a hundred, have forged a.head of that price :-,nd on
several d:tys the average reached $·9.40. . . . Beef prices hflve been
we3.k, although prices .::,re much better than they were a year &go.
Production of passenger cars A-nd trucks thus far this year
h<>.s exceeded production of any similar period ir. the past eleven years •
Dealers' stocks, hm,:ever, are estimated to b~:: belovr what thay were a
year ago. Probably the most significa.nt development in the l;}:oor situation was the gaining of i::;a.rgaining rights by thE: CIO union at the election held in the Fore t;lotor plants. . •• Att10mdance r1.t the American
Furniture llii:lrt vV"-S more than 25 per cent c:chet:.d of any previous midseason event. • . • For the four weeks ending May 24, department store
sales for the district were up 16 per cent over the comp.:irable period a
year ago.
-5-
R-849-b
ST. LOUIS
In southern Indiana prospects for wheat and barley are from
good to excellent, in fact much better than in the more northern counties. Outlook for fruit is the best in more than a decade. • •• Condition of pastures is reported well above the ten-year average.
Carryover of hay is large. Egg and milk production this spring was
unusually large. • • •
The cashier of an Indiana national bank comrrtented upon the
fact that nonmember State banks in Indiana have in recent years published fewer call reports than have the nation<'.l banks. He strongly
feels that when the Comptroller's office issues a call, other supervising agencies should do likewise.
A Kentucky bank officer commented to the effect that people
in his county were not ye:;t awake to the dangers of the present si tuation in Europe and that it will take an i.ntensi ve sales campaign or a
declaration of war to increase boncl sales.
MINNEAPOLIS
•
North and South Dakota and West Central Minnesota
Crop conditions throughout the territory visited are perhaps
the best in a great number of y-ears. Subsoil moi&-ture of from three to
four feet abounds throughout the entire area with virtually all the
crcps planted.
"f
•
'
'
This territory, principally the North Dakota section, up to
1920 was priuarily a wher::.t country, but therea,fter begnn diversifying
its crops. . • Bc;,nkers in the territory have advocated the placing of
small tands of sheep on each farm, as well as brood sows and poultry,
,;md in mostly every case the results have been exceptionally good.
Many of the banks now have a surr'lus of funds through liquidation of their v•rheat lorms. In some cr~,ses, how0ver, because of a good
deJn&nd for lccal loans bc:.nks vn::ro un:~bL: to h-~ndlc wheat loans.
A great n-w-ribcr of tro.ctors have been so.:.d in chis terri tory. In no
case was it reported that a barck sc::t'fered a lo2s. • • • Be.nks' exp0ricnce i!1 handling automobile paper is equ'tlly as good. One banker
sto.ted that he h":.d notified all outomobtle de:clers in his corrununity
that he would not :'.cccpt from them any automobile instalhnent paper
which ran for a period lcnger tlnn twelve months,
'There is littJ.e iem'lnd for defense s~..vings bonds.
M<my peop1e in th~s terl'itory c&n not forget ti:e severe losses suffered
-6-
Et-849-b
during the drouth :years of 1':)3/+-1936 v:hen their crops v;erE:, destroyed
u.nd a good portion of tbe cattle had to be disposed of. It is on1y
with:i.n the last few years that many of them have been able to l)Urchase
additional livestoclq conseq11ently they hc.ve no surplus funds with
which to pnrchase defense bo:1d.s even if they 1Hished to.
Two banke:cs said they did not wish to que.lify for the sale
of these bonds because of the adverse effr-~ct of withdravvals UiJOn their
deposits ·,vhich they llacl built up at great pains over a long period. of
tirne.
Gnder certain concli tions, the laws of South Dakota perrni t
State banks to operate exchanges. ApproximatEJly tFenty-fiv•) banLs in
South Dakota opurate one or more exchanges.
Vary few of these
stations controlled deposits in any great amount and ma!1Y stations are
operr,ted solely to olir2inata the possibility of new banks being che.rtered.
Northern 'i'-Tis_::onsin a,nd the Upper Peninsula of l';iichigan
Editors of twenty-six newspapers were called upon •••• The
trips rnr.>.de durin,c; 1940 tugether with a short study made during the
wint0r of 19//J-L~:.L, which indicated that the large W0<0kly pa;JorfJ arc
not being dis}Jl'l.ced by tho dailios and t11e rc.dio, l'c;~nlted in tho::;
r1re:>ent policies: that editors of all dal.ly pa1;or~> [nd weekly papers
oi' over 2,000 circulatioa will be called upon at l0ast onco during a
year; that short ne·~rs releo.sf~S coveri:1.g business cundi tions in localities throughout the Hinth .Gistrict would bo mailed to these papers
rugula.rly t.nd th£.t the serviees o.f' our statistic&l d.opartraent would
be open to editors in this district.
&
i
~
I
In addition to calling on the twenty-six editors, nine banks,
twenty department sto:res, and. eleven city clerY.:;:; were called ou iu an
effort to .secure adr:!.i tional clat.1 for certain l0cslities. l!• northern
Wisconsin 1mcl Miebigan there were six citien vi t:h newspapers large
enough to be called upon whi.cll '.vere not reporting bE.ntc dcbi ts. The
nine banks in these citles were all very willing to report debits to
us so th£J.t their· local editorG vro'J.:Lo. h<.:.ve the information to use •
•
[,PJ:SAS CITY
•.
Almost without oxcepti.on ::;mall banks reportocl that t:1.er;:;
no intGre3t in the neN defense 1Jonds in ti1eir com'1mnh.ies.
defer~sc bonds wor:t on C£-..le !vloy 1 e.r.d at the clot_;e of bvsine:~~~ J11.ne
1941, a total of' ta3,9;:~:,.L50 had b3en solei in. th8 'Tonti: Di::;trict.
this amount \3,601,950 vve:ce of Ser.ir::s E, :;'·3,:~65,7-:JO \'len:; of Series
and 011,554,0UO wore of 80ries G.
•
was
The
7,
Of
F,
-7-
R-849-b
There is very little money in rnost of these rural communities and mru~r people are in debt. Nearly all parts of this district
have been drought stricken for years and any new income that is currently accruing because of better farm cond1.tions is sorely needed
for paint, harness, clothing, farm machinery, and many other things.
There appears also to be a widespread feeling that before long compulsion will be resorted to in selling Government securiti.es and there
is a disposition to wait until that time come~. • • • Almost everywhere there is outspoken criticism of the failure of the Government
to reduce sharply nondefense spending.
The demand for money in the cattle country is good, the
loans of many banks in those communities being larger than their deposits. A good many cou..'1try banks are borrowL.~g from their correspondents and others expect to rediscount soon, this being especially
true of small banks that have many livestock customers. • ••
DALLAS
Northwest Texas
This entire section has received the heaviest rainfall in
years, consequently prospects for crops were never mor~ promising.
The wheat crop is one of the best in years.
The Irish potato
crop in one county has been developed during the past three years to
where it is one of the most important sources of income. Approximately 7.?000 acres have been planted this year and it is estimated
that the crop, at present price, will sell for $2,800,000.
The rangvs are fairly well stocked &'1d cattle are in excellent condition.
A recent increase in the price of oil llas stimulated activity and will bring about considerable drilling operations.
C'
Considerable complaint was registered qy the banks visited
against the competitive activities of the Production Credit Associations. A few banks have reduced their rates to meet this competition
and are doing a lot of missionar:r work among their customers.
SAN FRA!TCISCO
••
Umpqua R.iver Valley, Oregon
\
The number of sheep has increased in last few years.
Outlook for profitable year to livestock operators. Lumber mills are
all operating.
-8-
PUBLIC
HELJ~T:CONS
ACTIVITIES OF FEDEHAL HESEHVE BANKS
May 1241
Federal
Reserve
Bank
Boston
New York
Philadelphia
Cleveland
:.
.-;,.
Visit$ to Banks
Member Nonmember J Total
l
38
59
38
127
Richmond
Atlanta
Chicago
St. Louis
16
24
19
30
Minneapolis
Kansas City
Dallas
San Francisco
99
50
57
16
1/
·~
11
17
28
16
67
87
54.
194
12
12
13
4,020
3,54'/Y
3,180
25
19
41
M.
6
22
13
3,595
1,629
6,360
5,360
7
66
135
40
10
Not completely reported.
Meetings Attended
Numberj Attendance
3
55
43
26
96
234
70
67
19
.2
4
9
6
25
Addr0sses Made
·Number! Attendanc e
6
1
12
7
4
"·
_,
10
5
975
7
4,960
2,125
3,700
2
1
5
570
150
3,54711
496
269
818
2,002
1,500
1,030
350
700
885
BOARD OF" GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDFIE88 DF"F"ICIAL CDFIFIEB .. DNDENCE
TD THE BDAFID
June 24, 1941
Dear Sir:
There are being forwarded to you today under
separate cover
copies of pages 22-B and 28 of Form E
copies of pa~esl06 and 121-h (and revised page
and
of Table of "'ontents) of the "Manual of Instructions Govern.ing the Preparation of Functional Expense Reports (Form
E)".
These pages have been revised in order to provide for a new
unit, ''National Defense--Priorities Division" and for reporting the number and amount of Defense Savings Bonds sold
•,
by Issuing Agents.
An additional copy of each of these
pages is enclosed for your information.
Very truly yours,
E. L. Smead, Chief,
Division of B~ruc OperQtions.
"•
v
Enclosures.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BJUKS
··,
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
R-e5l
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 26, 1941
Dear Sir:
·"
•
There: is attached a copy of a resolution adopted l:y the Board
of Governors of the Federal Reserve System levying an assessment upon
the various Federal Reserve Banks in an amount equal to three hundred
and eighty-seven thousandths of one per C8nt (.00337) of the total
paid-in capital stock and surplus (Section 7 and Section l3b) of the
Federal Reserve Banks as of the close of business June 30, 1941, to
defray the estimated expenses and salaries of the members and employees of the Board from July l to December 31, 1941.
The rESsolution also contains instructions with regard to the
manner in which the payments on the assessment shall be deposited with
the Federal Reserve Bank of Ric.hmond.
...
.)
It will be noted from paragrr.~ph (2) of the resolution that
of the assessment 3/+-1/2% is to be paid on July 1, 34-l/21~ on Septemb8r 2, and the romainder, 31%, at such til:1es o.nd in such amounts as
the Board may call for tho payment thereof during the second hulf of
1941. Provision for payments is made :Ln this ma_rmer for the reason
tho.t the total assessment includes an estimate of JS387 ,067 (in addition to obl:l.gutions already incurred for architect 1 s fees and incidental expenses) to eover e:xpenditures which rnay be required during
the sGcond half of this yesr for construction of tho proposed addition on the Board 1 s existing prop(~rty, whieh vras discus sod at the
last confercmce of the President;:;. Payments on th:i.s portion of the
asr:>essment will not be required, however, unless ancl u..YJ.til the Board
decides that a contract should be let for the construction of the
building.
..,
•
Very truJ.y yours,
0. E. Foulk,
Fiscal Agent.
Enclosure
TO THE PRESIDENTS
OF ALL FEDEHAL RESERVE
BA.~KS
•
R-851-a
~ESOLUTION
LEVYING
ASSESS~ffiNT
VffiEREAS, Section 10 of the.Federal Reserve Act, as amended,
provides, among other things, that the Board of Governors of the Federal Reserve System shall have power to levy semiannually upon the
Federal Reserve Banks, in proportion to thoir capital stock and surplus, an aSSE.iSsment sufficient to pey its estimated expenses and the
salaries of its members and emplqyees for the half year succeeding
the levying of such assessment, together with any deficit carried forward from the preceding half year, and
WHEH.EAS, i t appears from a co:asideration of ·the estimated ex-penses of the Board of Governors of the Federal Reserve System that for
the six months' period beginning July 1, 1941, it is necessary that a
fu.TJ.d equal to three hundred and eighty-seven thousandths of one per
cent ( .00387) of the to·tal paid-in capital stock and surplus (Section 7
and section 13b) of the Federal Reserve Banks be created for such purposes, exclusivo of the cost of printing, issuing and redeeming :federal
Reserve notes:
NOW, THEREFORE, BE I'r RESOLVED BY THE BOARD OF GOVERNO:R.S OF
THE FEDErl.AL RESERVE SYS'fEM, THAT:
(1) There is hereb,r levied upon the several Federal Reserve
Banks an assessment in an amount equal to three hundred and eight,y-seven
thousandths of one per cent (.00387) of the total paid-in capital and
surplus (Section 7 and Section 13b) of each such Bank at the close of
business June 30, 1941.
..
•
(2) Thirty--four and a. half per cent (34-1/2%) of such assessment shall b& paid on July 1, 1941; thirty-four and a half per cent
04-1/2%) thereof shall be paid on September 2, 1941; and the remainder,
thirty-one per cent (31%), shall be paid at such times and in such
amounts as the Board I!lay call for the payment thereof during the six
months' yeriod ending December .31, 1941.
(3) Evely Federal Reserve Bank except the Federal Reserve
Bank of Richmond shall pay such assessment by trailsferring the amou.'lt
thereof on the dates as above provided through the Interdistrict Settlement I•'un.d to the Federal Reoerve Bank of Richmond for credit to the
account of the Board of Governors of the Federal Reserve S"tstem on the
books of that Bank, with telegraphic advice to Richmond of the purpose
and amount of the credit, and the Federal Reserve Bank of Riohmand shall
pey its assessment by crediting the amount thereof an its books to the
Board of Governors of the Fede1,al Reserve System on the dates as above
provided.
R-85'2
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
STATEMENT FOR THE PRESS
For immediate release
June 2?, 1941
The Board of Governors of the Federal Reserve
System today announced that Warren F. Whittier, FaFmer,
Dairyman and Cattle Breeder, Douglassville, Pennsylvania,
had been designated Deputy Chairman of the Federal Reserve Bank of Philadelphia for the remainder of the current year to succeed Alfred H. Williams who resigned
effective JulY 1 to become President of the Federal Reserve Bank. Mr. 'Nh1ttier has served as a Class C director of the Bank since his appointment as such on December
1, 1939 •
•
••
..
S-250
Reg. 0-41
INTERPRETATION OF 1 LAW 01\ REGULATION
(Copies to be sent to all Federal Reserve Banks)
January .3, 1941
Mr.
, Vice President,
Federal Reserve Bank of - - - - ' ·
--------------' -------------·
Dear Mr.
:
This refers to your letter of December 24, 1940 inquiring
whether certain loans made to Mr.
'A) , President of the-~Trust Company,
,
, .and held as assets of a voluntar,y
trust o£ which such bank is trustee are in violation of section
22(g) of the Federal Reserve Act.
•
....
You:r letter states that on Mey- 16, 19.36 Mr.
(A) , then
Vice President of the bank, borrowed a. sum o£ money from Mr.
(~)
_ a director of the bank, the balance of which is now $10,000. SUbsequent to the granting of the loan Mr..
(B)
caused the note to
be set up along with other aaeets in a voluntary trust which had been
created in 1935 with the member bank as trustee. In February 1940
an. additional loan, the balance of which is $2,100, was made by Mr.
(B)
to Mr.
(A)
and the note representing this loan was added
to the same trust. You state that the trust is regarded by Mr.
(Al as a sort of agenc,r. and provides not only for additions and
revocation but also for direction as·to investment 1::&" the donor.
As you know, the Board, in its letter of March 20, 19..36
(X-9528), took the position that the restrictions contained in section 22(g) of the Federal Reserve Act and the Board's Regulation 0
include loans to executive officers of member banks from trust funds
administered 1::&" such banks. However, the Board stated in its letter
of Mq 20, 19.38 (S-98) that it would not interpose 8.1\Y objection to
a transaction 1:¥ which a member bank, as trustee, acquired a note of
one of its executive officers, in the light of the facts stated in
such letter.
•
It appears from your letter of Deqember 24, 1940, that the
executive officer in this case did not borrow trust funds which were
being administered 1:¥ the bank and that the donor of the trust, who
made the loans from his personal funds, placed the notes evidencing
such loans in the trust in accordance with his rights reserved in
•
-2-
S-250
Reg. 0-41
the trust instrument to direct the investment of the trust funds.
In these circumstm1ces and upon the assumption that the transactions
were entered into in good faith and not for the purpose of e~ading
the statute, it does not appear to the Board that they constitute
violations of the law. It is noted, however, that your bank has
advised the member bank that a violation of the law is involved, and
if, after further consideration of the matter with your Counsel in
the light of all the information that m~ be available to you, it
is still,your view that the transaction is one which falls within
the prohibitions of the statute, we will be glad to have you take
the matter up again with the B&ard with a statement of your views
and those of your Counsel.
It does not appear that an interpretation of Regulation F
is involved since
Trust Compaqy is a State institution and
is not subject to a condition of membership comparable to the provisions of such regulation which relate to the investment of trust
funds in obligations of officers of the trustee bank.
Ver,y truly yours,
(Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretary.
>
•
•
•
~-· "!'~"""
-
264
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-251
ADDRESS Of"f"ICIAL CORRESPONDENCE
TO THE SOARD
February 5, 1941
Dear Sir:
•
•
•
.
With its letter R-566 of December 4, 1939, the Board enclosed a copy of a letter to the Chairman of the Presidents' Conference, to which was attached a proposed circular letter to all
Federal Reserve Banks, which was intended to supersede its letter
S-7 of June 24, 1937, with respect to separation allowances and special contributions to the Retirement System, and its letter X-9?98
of January 21, 1937, with respect to the retention of officers and
employees L~ service after the attainment of age 65. In the letter
to the Chairman of the Presidents• Conference the Board stated that
before reaching any decision in regard to the proposed circular letter it would appreciate receiving the opinion of the Presidents on
the suggested changes and asked that the subject be placed on the
program for discussion at the forthcoming Presidents' Conference.
It is understood that this matter was considered lYj the Presidents•
Conference and referred to a committee of that Conference for study •
Recently the Board has had occasion to give some further
consideration to this subject and has instructed me to advise you
that the special contribution to the Retirement System for the purpose of supplementing retirement allowances authorized b,r its letter
S-7 of June 24, 1937, was for the purpose of preventing in aqy case
in so far as possible and within reasonable limits any hardship or
injustice that might result from the p~ment of retirement allowances that would otherwise be too small. It was not its intention
that the retirement allowances of officers or employees voluntarily
resigning to accept other emplqyment should be supplemented b,y contributions on the part of the employing banks •
In order that there m~ be no misunderstanding with respect to this matter, pending a general review of the benefits of
the Retirement System, the Board amends its letter S-7 of June 24,
1937, to provide that no special contribution shall be made to the
•
-2-
S-251
Retirement System for the benefit of, and no separatio~ allowance
shall be paid to, an officer or emplqyee who voluntarily resigns to
accept other emplqyment.
Very truly yours,
Chester Morrill,
Secretary.
.·
•
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
•
•
266
S-252
Reg. Q-42
(Copies to be sent to all Federal Reserve Banks)
February 15, 1941
Mr.
, Vice President,
Federal Reserve Bank of
-----
Dear Mr.
This refers to your letter of JanuarJ 30, 1941, with enclosures, requesting the Board's views with respect to the question
whether a deposit carried by the ______ State Bank of
,
,
-------' in the name of
·' Inc., may proper~ be classified
as a savings deposit within the meaning of the Board 1 s Regulation Q.
•
It is understood timt
, Inc., is a nonprofit organization and that its parpose apparently is to effect a reduction in
the cost of electrici -:-r used by it;s mC;Jmbors. It is noted also that
according to the caslL~r of the
State Bank of
the
orga.nization has no ca.nital stock; tha-t it has received a direct loan
from the Government t>s proceeds of wh:i.eh have been used to build
lines for distributio;· of electric pm;;er; and that the organization 1 s
entire earnings are applied to expensc:s a;:1d to the retirement of this
loan.
Regardl.e:;;s of the fact that
, Inc., may not be operated for profit, it docs not appear that the orgtmiza.tion is operated
primarily for "religious, philanthropic, charitable, educational, fratwrnal or other similar purp0sos 11 within tho meaning of the definition
of a "savings deposit 11 contai!1ed in R(;gulu.t~on Q. Accordingly, it is
th(::; view of the Board that a deposit of _____ , Inc., ma,y not properly
be classified as a savint::s deposit under the Regulati.,;n.
•
Very truly yours,
(Siened)
•
L. P. Bethea
L. P. Bethea,
Assistant Cecrete.ry •
267
BOARD OF GOVERNORS
s-253
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DF"F"ICIAL CORRESPONDENCE
TO THE BOARD
J::arch 11, 1941
Dear Sir:
The Office of the Under Secretary of War fran time
to time requests the Board to obtain confidential information
from the Federal Reserve Banks as to management,'responsibility,
and financial condition of construction concerns to which the
War Department is considering awarding substantial construction
contracts.
.
It is believed by the Office of the Under Secretary
of War more desirable in the case of construction contracts
negotiated by the Engineer Corps of the Army to have this information made available to the Engineer Corps when it is investigating a concern in connection with a construction project rather than after the contract has been presented to the
Under Secretary for approval •
The War Department is issuing instructions to the
District ~nd Division Contracting Officers of the Engineer
Corps, suggesting that ·they obtain from Federal Reserve Banks
or branches confidential reports as to the management, responsibility, and financial condition of proposed contractors being
considered for construction contracts.
•
Under this arrangement, in all probability, you will
be visited from ttme to time by officers of the Engineer Corps,
requesting you to assist themi Your cooperation will be very
much appreciated •
•
Very
truly~ l· ~
...
http://fraser.stlouisfed.org/ TO THE
Federal Reserve Bank of St. Louis
Ernest G. Draper
PRESIDENTS OF ALL FEDERAL RESERVE BANKS
268
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-254
Sec. 5136 R.S.-17
ADDRESS DF'F'ICIAL CDRREBJODNDENCE
TD THE BOARD
March l2, 1941
Dear Sir:
For your information the~e are &ncloaed herewith copies
of certain correspondence between tn• Pr~ident of the Federal Reserve Bank of Cleveland, the Board of GoYernors, and the Comptroller
of the C~rency with reference to certa~ questions regarding the
applicabilit,y of section 5136 and section 5200, United States Revised Statutes, to the acquisition br member banks of assignments
of claims arising under Emergency Plant lt'a¢1lities Contracts. The
following are the letters copies of which are enclosed:
Letter tram the President of the Federal Reserve Bank of
Cleveland dated Nove•ber 29, 1940, with a cop,y of its
enclosure;
Letter from the Board to the President of the Federal
Reserve Bank of Cleveland dated December 9, 1940;
•
Letter !rom ti1e Comptroller of the
dated February 24., 1941; and
Curren~3
to the Board
Letter from the Board to the President of the Federal
Reserve Bank of Clevel&ld dated February 26, 1941.
There were certain other letters of intermediate dates which were
e~hanged with regard to this matter, but they do not affect the
conclusions expressed in the letters enclose(;\, and you will note
that the enclosed letter from the Comptroller of the Currency expressly states that it supersedes certain earlier letters from his
office on this subject.
s,
•
Enclosures
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
•
S-254-a .
Sec. 5136 R.S.-17
FEDERAL RESE.RVJi: BANK OF' CLEVELAND
Novem.ber 29, 1940
Board of Governors of the
Federal Reserve System
Washington, D. C.
Gentlemen:
Enclosed you will find copy of a letter addressed to me
National Bank and Trust
Company, - -......' ___ , on november 27, 1940.
by _ _ _ , Vice President of The
In reading Mr.
' s let·t.er, I am impressed vd th the
fact that if it is possible to accomplish ti1e result desired ~J him,
it cannot be achieved through any construction of R. S. Section
5200, for the reason that the provisions of this section, paragraph
8, clearly specifY that the securit,y of the notos mentioned therein must be bonds, notes, certificates of indebtedness or treasur,r
· bills of the United States, or obli ations f'ul ~r aranteed both as
to principal and interest qy the United States. CLear , the contract which Mr.
montions is a direct obligation of the
! U~ited States and not an obligation fully guaranteed by it both
as to principal .and interest.
In this connection, I invito your attention to the portion
of the 7th paragraph of R. S. Section 5136, reading as follows:
....
"The limitations and restrictions heroin contained
as to dealing in, u.nderwriting and purchasing for its
own account, investment securities· shall not ~·pply to
obligations of the United States or general obligations
of any state or of any political subdivision thereof
...
II
As the a~endments to this portion of this paragraph of Section 5136
were all made prior to the passage of the Assignment of Claims Act
of 1940, it is arguable that tho reference to obligations of the
United States was intended to cover only obligations of the United
States having the characteristics of investment securities. However, the literal ,terms of this portion of the section seem to me
to include direct obligations of the United States of the type to
which Mr.
refers. Therefore, I wish in considering Mr.
--=--'s letter thc..t you would advise mewhether the proceeds of
contracts of the type mentioned b;)r him may be assigned to member
•
270
S-254-a
Sec. 5136 R.S.-17
-2-
banks b,y the contractor and considered as investments b,r the member
banks on a parity with obligations of the United States having the
quality of investment securities as mentioned in the 7th paragraph
of said section 5136 and in the Regulations of the Comptroller of
the Currenc,y of JUne 28, 1938.
It is mf opinion with respect to Defense Plant Contracts,
after completion of the plant and acceptance thereof b,y the Government, that member banks mey be willing to acquire the assignment of
the right to receive p8311lents from the United Sta.tes under SllCh contracts and hold such rights as investments in amounts far in excess
of the limitations imposed b,y Section 5200 if obligations of the
United States of this type can be given the swne status as ci·ther
obligations of the United States having the characteristics of investment sec~itics.
In discussing this matter verbally, Mr.
has contended that obligations of the United States to pay stated installments under a contract should have the same status for investment
by member banks as other obligations of the United States having
the quality of investment securities, and that to make this distinction between the two types of obl,igations constitutes a discrimination against member banks in their efforts to aid in the
Defense Program and to empla,y their excess reserves at a profit.
His argument has impressed me as having merit.
Very truly yours,
(Signed)
~.
J. Fleming
j)
President •
..
•
,
S-254-b
Sec. 5136 R.S.-17
THE
NATIONAL BANK AND TRUST COMPANY
November 27, 1940
Mr. M. J. Fleming, President
Federal Reserve Bank
Cleveland, Ohio
Dear Mr. Flemi.'lg:
For the past six weeks we have been working with one of our
clients - namely, the
Corporation - to negotiate a contract
with the United States Government for new plant facilities tmder the
defense program, the estimated cost of which is $910,000.00.
·
~ing the closing days of negotiations between the company,
the banks anci the Government, it was stated by the Government representatives that the contract in its final form was a direct obligation
of the Government for not less than 80% of tho total cost of the new
facilities. Therefore, tho interest rate to be charged on this obligation qy the banks would have to be closely in line with that of
Government obligations, and they set a c&iling of 2% for this parM.Jular contract, and apparently the only reason for not making the rate
lower than 2% was due to the fact that 20% of the obligation is to be
repaid by t.he contractor - namely, the
Corporation.
•
•'
•
___ Corporation is a small but excellently operated corporation whose total resources will not exceed $250,000.00; therefore,
it would be rather foolharqy for us to consider a loan of $910,000.00
to a company of this size unless the Goverrunent 1 s,obligation for 80%
of the a'Ilount would be definitely irrevocable. It is our opinion that
tho present contract is an irrevocable obligation of the Government up
to at least SO% of the total amount involved, and therefore we have
not considered that the
Corporation will at any time be called
upon to pey- more than 20% of the totnl contract, plus the interest on
the obligation dur~ng its existence •
If our assumption is c9rrect in this matter, we feel that
definite action should be taken qy the Federal Reserve Board and the
Comptr·oller of the Currency, to classify the contract up to 80% of
the total figures involved, as a direct Government obligation, the
same as a Government bond, thereqy releasing the banks from the legal
limitations as provided in Section 5200, and also providing them with
an "A" classification from the Federal Reserve Bank on the oontrnct
•
S-254-b
Sec. 5136 R.S.-17
-2-
in case of emergency, for that portion which is the Government's obligation.
I believe that
A , from the
Cit,y Bank at
,
furnished your attorneys with his copy of this contract, and that f4r.
B
is thoroughly conversant with its contents.
I might state, for your information, that irrespective of
the ruling which m8f be handed down in this case, we are proceeding
with a loan to the company under the contract, in order that the
National Defense Program will not be further held up, but would like
to be .in a position in the near future of releasing at least a portion of our legal credit limit to the
Corporation for working
capital requirements which will be necessar,y after completion of the
new facilities.
If there are aqy questions which you have in regard to the
contract or aqy other phase of this situation, I will be more than
glad to give you the desired information.
Thanking you for your consideration, ond with kindest personal regards, I am
Sincere~
1
yours,
(Signed)
Vice President
•
..
•
•
J
S-254-c
Sec. 5136 R.S.-17
December 9, 1940
Mr. M. J. Fleming, President,
Federal Reserve Bank of Cleveland,
Cleveland, Ohio.
Dear Mr. Fleming:
..
This refers to your letter of November 29, 1940,
enclosing a letter from .Jr. _____ , Vice President of The
---~ National Bank and Trust Company, __.~--' ------'
raising certain questions with respect to the proper construction of section 5136 and section 5200 of the Revised
Statutes in relation to obligations of the United States
arising out of Emergency Plant Facilities Contracts. The
questions you raised will be taken up with the office of
the Comptroller of the Currency, since they involve limitations applicable to national banks as well as to State member banks, and you will be advised as soon as possible of
the conclusions reached.
Very truly yours,
•
(Signed)
Chester Mort-ill
Chester Morrill
Secretary •
•
•
S-254-d
Sec. 5136 R.S.-17
TREASURY DEPARTMENT
'
Comptroller of the Currency
Washington
February 24, 1941
Board of Governors of the
Federal Reserve System
Washington, D. C.
Gentlemen:
This is with further reference to your letters of Decem...:
ber 10, 1940 and January 14, 1941, relating to the acquisition by
national banks of cla~ns against the Federal Government arising
out of Emergency Plant Facilities Contracts assigned under the provisions of the Assignment of Claims Act of 1940. It is believed
that this letter clarifies the opinions expressed in our letters
of January 6th and February 8th, which are hereby superseded.
By virtue of the Assignment of Clnims Act, claims arising
under such contracts may be assigned.to banks as security for loans.
In such cases the loan is made to the contractor, and the claim
against the Government is assigned to the bank as collateral security. Such loans are subject to the ordinary 10% lL~tation prescribed by section 5200 of Rev. Stat. of 1873, as amended (u.s.c.
title 12, sec. 84), since none of the exceptions to that limitation
specified in section 5200 is applicable to this situation.
•
•
The question has been raised whether assignrrLents of such
claims may be purchased by national banks outright, rather than being
taken as security for loan,s to the contractor. Section '5136 of Rev.
Stat. of 1873, as ar.1ended (U.S.C. title 12, sec. 24) authorizes national banks to acquire "promis-sory notes, drafts, bills of exchange,
and other evidences of debt". In order to constitute an "evidence of
debt" within this statutory provision, an obligs.tion must involve an
admission of liability or a promise to pay a specified or determinable
amount. Until the completion of the plant facilities called for by
these contracts, the Government does not appear to undertake any such
absolute obligation, although it does bind itself to assume an obligation not to exceed a specified MlO\mt upon the completion of the facilities and the filing of a Final Cost Certificate. Accordingly, until
the facilities ha.ve been completed and the Final Cost Certificate filed,
the contractor's potential claim against the Government does not constitute an evidence of debt which may be purchased by a national bank •
S-254-d
Sec. 5136 R.S.-17
-2-
After the facilities have been completed and the Final Cost Certificate
filed, the contractor's claim against the United States becomes an evidence of debt within the meaning of section 5136 and may be acquired as
such by a national bank.
The question then arises whether the acquisition of such claims
is subject to any of the limits as to amount which are prescribed in the
National Bank Act. Inasmuch as these assigned claims do not constitute
"investment securities 11 as defined in section 5136, the applicable limitations and exceptions are those of section 5200, relating to loans and
sindlar extensions of credit, rather than those o£ section 5136, relating to investment securities. However, it is the position of this office that the lindtations of section 5200 do not apply to obligations of
the United States, since the Federal Government is not deemed to be a
"person, copartnership, or corporation" within the purview of that section. It is therefore concluded that after the plant facilities have
been completed in accordance with the contract and the Final Cost Certificate filed, the claim of the contractor against the Government may be
acquired by a national bank W'i.thout any limitation other than those imposed by the applicable principles of safe and sound banking practice.
In purchasing such cla~ns, the bank should take into consideration whatever possibility exists of the assigned claim thereafter becoming subject
to valid defenses, set-offs, or counterclairiLS.
If you deem it advisable, it is agreeable that this letter be
published in the Federal Regeqe BulJ.et~n.
Yours ver,y truly,
(Signed)
Preston Delano
Comptroller of the Currency
•
•
•
........
S-254-e
Sec. 5136 R.S.-17
February 26, 1941
Mr. M. J. Fleming, President,
Federal Reserve Bank of Cleveland,
Cleveland, Ohio.
Dear Mr. Fleming:
This is in further reference to your letter of February 10, 1941, and previous .correspondence regarding certain
questions arising under section 5136 and section 5200, United
States ltevised Statutes, which were submitted by you and were
by us referred to the Comptroller of the Currency. We enclose
herewith a cop,y of a letter from the Comptroller of the Currency dated February :24, 1941, with reference to this matter.
•
You will note that the Comptroller's letter concludes
that, after the plant faciliti.es have been completed in accordance with the contract and the Final Cost Certificate filed,
the claim of the contractor against the Government may be acquired by a national bank without any limitation other than
those imposed b.Y the applicable principles of safe and sound
banking practice. In view of this ruling of the Comptroller of
the Currency and the fact that State member banks under the law
are subject to the same conditions vd.th respect to the purchasing and holding of invE!stment securities as are national banks,
the Board will consider that State member banks, in acquiring
clain1s against the Government of the kind described after the
plant facilities have been completed in accordance with the contract and tne Final Cost Certificate filed, are likewise not subject to the limitations imposed by section 5136, United States
Revised Statutes •
Very truly yours,
(Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretary •
•
•
S-255
Reg. R-3
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
March 10, 1941
Mr.
, Vice President,
Federal Reserve Bank of ____ ,
-------'
Dear Mr.
---·.
Consideration has been given to your letter of February
11, 1941, and enclosures, relating to the question whether a director of a member bank may serve as a director of ------------'
an investment trust, in view of provisions of section 32 of the
Banking Act of 1933. The specific question is whether --~~~
is so actively engaged in issuing its own shares as to be "primarily engaged" in the issue or distribution of securities within the meaning of the sta.tute•
It is understood that
was incorporated in
1928. During the five years ending June 30, 1936, it issued
62,062 shares of its stock, and on the latter date a total of
88,059 of such shares was outstanding. Between that date and
June 30, 1940, 283,359 more shares were sold, and at the end of
1940 the total number of shares outstanding was 403,093.
•
The shares are sold through independent organizations
with the result that
does not derive aQY direct profit
from such sales. However, you and your counsel are of the opinion that since
is actively engaged in the issue and
distribution of its shares, the interlocking relationship is prohibited by section 32.
On the basis of the information submitted, the Board
agrees with this conclusion.
Very truly yours,
•
•
(Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretary •
278
BOARD OF GOVERNORS
CF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-256
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 20, 1941
Dear Sir:
Our attention ba:t beet~ oalled to the fact that the
Defense Commission and the Ia~ •nd Navy Departments regard the
"amortization" provision (,section l2J+ of the Internal Revenue
Code) as applicable only to trcorpora.tions" (as defined in section 3797 of the Internal R~• Cod~) and as not applicable
to partnerships or individ'U4ls. 'thi$ view is ~ased upon the
fact that the opening wox-ds of section 124 make it applicable
to "Every corporation".
Of course this interpretation means only that a partnership or individual would not be entitled to the benefits of
section 124. All taxpayers, whether "corporations" .or not,. may
receive "a reasonable allowance for the exhaustion, wear and
tear of property used in the tx-ade or businef;ls, including a
reasonable allowance for obsolescence" in accordance wi.th the
usual procedure which has been in effect since long prior to
the enactment of section 124 (see section 23(1) of the Internal Revenue Code).
·
•
..
In one case which has come to our attention there was
some misunderstanding as to the applicability of the statute,
and this letter is being written for your information in case
the question should arise in your district •
Very truly yours,
•
Chester Morrill,
Secretary.
TO THE PRESID~TS OF ALL FEDERAL RESERVE BANKS.
COPY TO FEDERAL RESERVE DEFENSE CONTRACT OFFICERS
•
219
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
S-257
Sec.2(b) B.A.of 1933-1
WASHINGTON
ADDREBB OFFICIAL CDRREBPDNDENCE
TD THE BDARD
March 22, 1941
Dear Sir:
For your information there are enclosed copies of certain correspondence between
the Office of the Comptroller of the Currency
and the Board with respect to the existence of
affiliate relationships, within the meaning of
section 2(b) of the Banking Act of 1933, where
corporate stock is pledged with member banks to
•
secure loans made by them •
Very truly yours,
-··
Chester Morrill,
Secretary •
•
Enclosures 2
•
•
TO THE
PRESIDm~TS
OF ALL FEDERAL RESERVE BANKS
280
S-257-a
Sec.2(b} B.A.of 1933-1
TREAStJHY DEPARTMENT
Comptroller of the Currency
Washington
October 7, 1940
The Board of Governors of
The Federal Reserve System
Washington, D. c.
Gentlemen:
I
"'
..
We have recently received an inquiry from a national bank and
also from the Reconstruction Finance Corporation regarding·the proper
construction of the statute relating to affiliates of member banks (U.S. c.
title 12, sec. 22la) (Banking Act of 1933, sec. 2 as amended by Banking
Act of 1935, sec. 301}, as applied to certain loan transactions. Since
the Reconstruction Finance Corporation participates in loans made by national banks and state member banks, it is deemed advisable to ascertain
whether the Board concurs or is at variance with the tentative conclusions reached by this office on tho questions presented.
In the first case presented the bank loans a substantial amount
to a private corporation and accepts as collateral security more than
51% of the stock of that corporation. The collateral form agreement prescribes that the holder can transfer the stock to its nominee or to itself at any time and thereupon can vote the stock for all purposes. The
certificates evidencing such stock nre delivered to the bank endorsed in
blank, in transferrable form, but there is no act~l transfer on the
books of the corporation. The question propounded is whether under these
circumstances the corporation must be considered an affiliate of the ba~
This office is inclined to answer this question in the affirmative, feeling that the case is clearly within the provisions of subsection (b) (1)
of section 22la of the above-mentioned statute. The bank undoubtedly
controls a majority of the voting shares of the borrowing corporation.
However, it is felt that if the collateral agreement with the borrowing
corporation provided that the right to vote the stock would vest in the
holder of the note only in the event of default on the part of the borrower, then the affiliate relationship would occur only if and when such
default occurred.
Under the second set of facts, the loan is the same and the
collateral provisions are identical but, coincidental with the making of
the loan, the Reconstruction finance Corporation enters into a participation agreement with the bank, using RFC Form L-298 or RFC Form L-300,
•
281
S-257-a
Sec.2(.b) B.A.of 1933-1
-2-
The Board of Governors of the
Federal Reserve System, Wash., D. c.
copies of which forms are enclosed. Under the provisions or both tor.m
agreements the Reconstruction Finance CorpOration agrees to participate
in the loan, but under RFC Form L-298 it is contemplated that the participation will be immediate, whereas under RFC Form L-300 the participation is deferred. In both agreements there are provisions to the
effect that at ~ time after the Reconstruction Finance Corporation has
actually distributed its participation in the loan it may call_upon the
bank to transfer the note and the collateral security to it, whereupon
the Reconstruction Finance Corporation would merely issue a certificate
of participation to the bank. We have been advised b.1 the General Counsel ot the Reconstruction Finance Corporation that when the Corporation
takes possession ot the note and collateral it automatically acquires
all ri$hts of the bank under the proxies and that the bank becomes bound
to place the Corporation in position to exercise all such rights, and
that the right or possession vested in the Corporation includes the legal right of the "corporation to vote the stock in its independent discretion.
•
Whereas the provisions of the participation agreements are not
altogether clear on the matter of the voting control, this office has
reached tlie tentative conclusion that if the bank is subject at all tmles
to be called upon to transfer the note end stock to the Corporation, giving to the Corporation the right and power at its own discretion to vote
the stock for all purposes, the measure or control over the borrowing
corporation available to the bank is not such as requires that the borrowing corporation be classified as an affiliate of the bank in such
cases.
This office would appreciate the reaction of the Board to these
tentative conclusions.
·
·
Yours ve:ry truly,
(Signed)
E. H. Gough
Deputy Comptroller
Enos. 2
..
•
5-257-b
Sec. 2(b) B.A. of 1933-1
March 18, 1941
Honorable Preston Delano,
Comptroller of the Currency,
Washington, D. C.
Dear Mr. Delano:
This refers to Mr. Gough's letter of October 7, 1940
which sets forth certain tentative conclusions of your office
with respect to the existence of affiliate relationships where
corporate stock is pledged with member banks to secure loans
made by them. A reply has been delayed pending receipt of advice as to the views of Counsel for the Federal Reserve Bank of
-~~' in whose district the case prompting your inquiry arose,
and the discussion of the opinion of C01.msel for that bank with
Mr. Roberts of your office.
The Board concurs in the tentative conclusions expressed
in Mr. Gough 1 s letter, which arc to the effect
1. That where more than 51 per cent of the stock
of a corporation is taken as security for a loan and the
bank has the right under a collateral agreement to have
the stock transferred to its name and vote it, an affiliate relationship exists;
•
2. That if the right of the· bank to vote the stock
can not be exercised prior to default by the borrower,
an affiliate relationship would not exist under the collateral agreement prior to su~h default; and
•
3. That where the Reconstruction Finance Corporation, through an agreement with the bank vdth respect to
participation in the loan, has the right to have the stock
transferred to it and vote it, ~ affiliate relationship
does not exist under the collateral agreement •
•
.,
•
With respect to the last conclusion, it would necessarily
follow that if in similar circumstances a Federal Reserve Bank, under an agreement with respect to participation in the loan pursuant
to section 13b of the Federal Reserve Act, has the right to have
the stock transferred to it and vote it, an affiliate relationship
would not exist •
-Honoraple Preston Delano
,
-2-
S-257-b
Sea. 2(b) B.A. of 1933-1
It'is felt that under the provisions of the statutes
relating to affiliates of member banks these conclusions are unavoidable. In acting on the questions presented, the Board has
been concerned as to whether the rulings might discourage or prev.ent banks from making proper loans, especially in connection with
national defense. However, in view- of the different ways in which
loans of the kind under discussion can be handled under the foregoing rulings, it is not believed that the position of the Board
and your office should cause undue difficulty. It is assl.\Jl\ed that
in any ease where an examiner has any doubt as to whether these
rulings are appJ.icable he will fully inform the bank as to tho
basis for the position of the Board and your office and, before
requiring any action_by the bank involved, will consult with your
office, or the appropriate Federal Reserve Bank if a State member
bank is involved~
Very truly yours,
•
(Signed) Chester Mqrrill
..
•
•
•
•
Chester Morrill,
Secretary •
284
.....
S-258
Reg. 0)42
INTERPRETATION OF LAW OR.REGVLATION
(Copies to be sent to all Federal Reserve Banks)
April 2, 1941
Mr.
, Vice President,
Federal Reserve Bank of ___ ,
--------------' ----------Dear Mr.
This refers to your letter of March 19, 1941, enclosing a
cop,y of a letter dated March 15, 1941, from Mr.
(A) , Chairman
of the board of directors of the
National Bank,
,
~ to Mr.
, Chief National Bank Examiner, inquiring
-wh_e_t_h_e_r section 22(g) of the Federal Reserve Act would prohibit the
_ _ _ National Bank from making a. loan to {A)
as trustee of
his father's estate.
..
•
•
It appears that Mr.
(A)
is chairman of the ooard of
directors of the national bank. It also appears that he is trustee
of his father's estate, in which he has a life interest, and that
the property of the estate will upon his death vest in his two sons,
one of whom is vice president of the national bank. The trust estate consists of property with a value in excess of $100,000 with no
indebtedness, the principal item being a business block yielding approximately $7,500 per annum, and the estate may wish to borrow about
$15,000, which Mr.
(A)
describes as a "gilt-edged" loan and one
"that any bank would obviously welcome".
It will be assumed that under the laws of the State of ____
a trustee in borrowing on behalf of the trust may sign the instrument
in such a way as to avoid any personal liability on the obligation
and that the proposed loan would be handled in this way. While the
trustee would thus have no personal liability, he would benefit directly from the making of the·loan in his capacity as life tenant of
the trust estate, which would be obligated on the note. He is interested in the loan both in a representative capacity and in his own
right. In this connection, it is notewortqy that the law forbids a
member bank to make any loan or "extend credit in any other manner"
to an executive officer.
It appears that the principal purpose underlying the enactment of section 22(g) of the Federal Reserve !.ct was to prevent the
•
285
S-258
Reg. 0-42
-2-
exercise of undue influence by executive officers of member banks in
obtaining credit from the banks they serve; and, while there is nothing to suggest that any such influence would be 11sed in this particular instance, it is apparent that the case is one of a type in which
undue influence ~ readi~ be exercised.
In all the circumstances, and particularly in view of the
fact that ivir.
(A) _ is not only trustee but also a beneficiary of
the trust estate which would receive the loan, it is the view of the
Board that the making of the loan proposed would contravene the intention of Congress and would be inconsistent with the provisions of
the statute.
Ver,y truly yours,
(Signed)
Chester Morrill
Chester Morrill,
Secretary,
•
•
•
..
.
•
286
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
S-259
ADDREBB OF"F"ICIAL CORRESPONDENCE
TO THE BOARD
April 18, 1941
Dear Sir:
•
4
t
•
For your information there is attached a copy of a letter from Mr. William s. Knudsen, Director General of the Office
of Production Management, to Governor Draper, and of the Board's
reply thereto, with respect to reimbursement of the Federal Reserve Banks for expenses incurred in the offices of the District
Coordinators subsequent to March 1, 1941 •
It is suggested that requests for reimbursement, begin~
ning with the month of March 1941, be submitted to Defense Contract Service of the Office of Production Management on Standard
Form 1034, which it is understood is used in obtaining reimbursement for fiscal agency expenses.
All expenses cormected with the offices of the District
Coordinators should be reported in fiscal agency unit 17g on page
22-B of Form E. This unit should be headed "National Defense District Coordinator" and the title of the National Defense.frmction on page 10 should be changed to "National Defense - Defense
Contract Officer" •
Very truly yours,
•
Enclosures 2
•
Chester Morrill,
Secretary •
(Memo enelosed with Mr. Knudsen's letter
sent to Presidents only)
.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
•
3-259-a ·
OFFICE OF PRODYCTION MANAGEMENT
Office of the Directqr General
Washington, D.t C.
April 16, 1941
Governor Ernest G. Draper
Board of Governors of the
Federal Reserve System
Washington, D. C.
Dear Governor Draper:
•
•
•
•
:.
We have cleared with the Bureau of the Budget the matter
of establishment and maintenance, through utili~ation of the services of the Federal Reserve System, of local field offices of the
Defense Contract Service Section of the Office of Production Management, and the ailocat.ion of funds for and method of reimbursement
for such services, along the lines agreed to between this office and
the Board of Governors effective March 1, 1941. Accordingly, the
purpose of this letter is to confirm that agreement and to make formal request to the Board of Governors of the Federal Reserve System
that it render such service to and on behalf of the Office of Production Management, subject to reimbursement within the limits hereinafter noted.
As to the nature of the service requested, I enclose a
cop,y of a memorandum setting forth the projected organization and
functions of the Defense Contract Service Section with which you
are acquainted., In this connection, we are concerned only with the
organization and functions of the field offices of the Section in
the various Federal Reserve Banks and Branches, which will operate
subject to the direction of the District Coordinators who are appointed and paid directly by the Office of Production Management.
This does not refer to the service which the Defense Contract Officers of the Banks are now rendering and will continue to render on
behalf of the Defense Contract Service Section, subject to the immediate direction of the presidents of the Banks and of the Board
of Governors. The service which you have been asked to undertake
comprehends the establishment, maintenance and payment of all expenses, including salaries of staff, of the offices of the District
Coordinators, and appropriate per diem and travelling expenses, but
not salaries, of the District Coordinators. Per diem in lieu of
subsistence for persons eerving on a dollar-a-1ear basis or without
compensation, will not exceed $10 per day and for other persons w11l
not exceed $5 per day, while away from their headquarters on official business. The offices of the District Coordinators will notify
S-259-a
-2-
the Office of Production Management when it is proposed to utiliz~
the services of persons on a dollar-a-year or without compensation,
basis.
•
Our understanding with the Bureau of the Budget is that
a lump sum sufficient for the purpose may be allocated from funds
available to the Office of Production Management to reimburse the
Federal Reserve Banks for the expenses of the service they render
in this matter from March 1, 1941 to June 30, 1941. Based on our
tentative estimates, it is believed that $200,000 will suffice for
this purpose and, upon notification from you that this letter clearly sets forth our understanding, this amount will be earmarked
therefor. It is understood that the Banks will not be reimbursed
for the use of space, if available, in the Federal Reserve Bank and
Branch buildings, nor for the use of Federal Reserve office equipment loaned temporarily to the offices of Coordinators, but that
they will be reimbursed for rent paid for outside office space and
for office equipment purchased for the account of the Office of Production Management, for the use of such offices. Reimbursement under this agreement with respect to rent after June .30, 1941, for
outside office space will be subject to review and approval by the
Office of Production Management. The procedure for reimbursement
will follow the usual practice, and reimbursement will be made
monthly on Standard Form 1034 vouchers. It is further understood
that this whole arrangement withyou will be subject to review before July 1, 1941, in the event that changes may be deemed necessary
in view of organizational and budgetary considerations affecting the
Office of Production Management.
Would you be good enough to transmit this letter to the
Board of Governors? We would appreciate confirmation that this letter clearly sets forth our understanding and that the Federal Reserve Banks are prepared to continue the service requested subject
to reimbursement as above outlined,
•
Very truly yours,
(Signed)
w. s.
Knudsen
William S. Knudsen
•
Enclosure
• for FRASER
Digitized
288
289
S-259-b
April 18, 1941
Mr. William S. Knudsen, Director General,
Office of Production Management,
Social Security Building,
Washington, D. C.
Dear Mr. Knudsen:
Your letter of April 16, 1941 to Governor Draper
with respect to the establishment ru1d maintenance of local
field offices of the Defense Contract Service of the Office
of Production Management at the Federal Reserve Banks has
.
been presented to the Board of Governors.
The Board has
authorized me to advise you that the Federal Ref>erve Banks
are prepared to continue the services requested, subject
to reimbursement as outlined in your letter, and it wishes
to take this opportunit,y of assuring you that it is anxious
"
to be of all possible assistance in this important work.
Very truly yours,
•
'•
• for FRASER
Digitized
(Signed)
Chester Morrill
Chester Morrill,
Secr\:ltary.
290
BOARD Or GOVERNORS
DF THE
FEDERAL RESERVE SYSTEM
S-260
WASHINGTON
ADDREaa CP'P'IDIAL DCRREaPCNDENCE
TC THE BOARD
April 25, 1941
Dear Sir:
Recently one of the Federal Reserve Banks advised
the Board informally that it expects a crowded condition in
its vaults when the new financing program of the Treasury
gets fully under way, and asked whether there would be any
objection to cancelL~g and shipping to Washington for de~
struction the stock of unissued Federal Reserve Bank notes
now held by it.
..
•
Available information indicates that $265,188,000
of Federal Reserve Bank notes are now held at the Reserve
Banks and $450,800,000 in Washington. There appears to be
little likelihood that it will be found necessar,r or desirable to pay out existi.Ilg stocks of unissued Federal Reserve
Bank notes. Accordingly, if you wish to cancel and ship to
Washington for destruction in the usual manner aqy unissued
Federal Reserve Bank notes now held by your Baa~, the Board
will interpose no objection.
It is not contemplated that the stock of Federal
Reserve Bank notes in Washington will be destroyed at this
time.
L. P. Bethea,
Assistant Secretary.
_..
TO THE PaESIDENTS OF ALL
• for FRASER
Digitized
r~DERAL
RESERVE BANKS
S-261
Reg. D-14
INTERPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal
Rese~ve
Banks)
April 28, 1941
Mr.
, First Vice President,
Federal Reserve B&~~ of
,
---------------'
Dear Mr.
---·.
----------~--
This refers t.o your letters of March l2 and April 14, 1941,
with respect to the question whether certain "Loan Trust Funds" now
carried on the books of the Bank of
as time deposits should
properly be classified as demand deposits.
"''
•
•
•
•
-·
It is understood that, in accordance with regulations of the
Federal Housing Administration and pursuant to the terms of the agreement between the bank and the borrower embodied in a "deed of trust",
the funds in question represent accumulated paJments made to the bank
mont~ by F. H. A. borrowers for the purpose of enabling the bank to
meet future installments of mortgage insurance premiums, fire insurance premiums, taxes, etc., before they become delinquent. No interest is paid qy the bank on such funds.
The deed of trust apparently contemplates that all such p~
ments must be made to the bank b,r the borrower at least one month· before the respective installments of premiums, taxes, etc., are due
and that no portion of the funds deposited are to be utilized b,y the
bank or otherwise withdrawn from the account for more than 30 days
after the pqrment by the bo1~ower to the bank. Nevertheless, it appears that in\isolated instances, such as where a borrower makes his
monthly ~ment several d~s or more after it is due, it ~ become
necessar,y for the bank to utilize funds which have been on deposit
in the account less than 30 d~s in order to meet such premiums or
taxes. In view of' this fact, the funds involved do not appear to
comply literally with the requirements of a 11 time deposit" as set
forth in the Board's Regulations D and Q. Except for such isolated
cases, however, it is understood that no money paid into the account
by the borrower is utilized or withdrawn within 30 d~s from the
date of .its deposit; and in the circumstances, therefore, the Board
will raise no objection at this time to the classific.ation of the
funds in question as time deposits under its regulations.
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secretar,y.
BOARD OF GOVERNORS
s-262
OF' THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF"P'ICIAL CORRES .. ONOENCE
TO THE BOARD
May 12, 1941
Dear Sir:
•
For your information a.nd guidance, there is
enclosed a copy of a letter dated :May 12 advising the
Federal Reserve Bank of Atlanta. that it may inform:each
State banking department in its district that, in the
absence of advice to the contrary, the banking depurtment may feel reasonably certain that a call for condition reports will be made upon State bank members
whenever the Comptroller of the Currency calls upon
national banks for such reports.
L. P. Bethea,
Assistant Secretary.
_,.i
•
Enclosure •
.....
TO THE- PRES I DENTS OF ALL FEDERAL RESERVE BANKS EXCEPT
ATIJ~NTA
S-262a
•
c 0 p y
May 12, 1941
M'r. J. E. Denmark,
l\ssistant Vice President,
Federal Reserve Bank of Atlanta,
Atlanta, Georgia.
Dear Mr. Denmark:
This refers to :ruur letter of April 7 in which you
inquire whether arrangements might be made for your Bank to
give advance information to State banking authorities in your
district regarding calls for condition reports to be made upon
State member banks.
•
Since December 28, 1922, when the National Bank hct
was amended so as to require a minimum of three calls per year,
instead of five as required before that time, the Comptroller
of the Currency has made no more than four calls per year upon
national banks for condition reports; and beginning with December 1922 the number and dates of the Board's calls upon State
bank members have been identical with the Comptroller•s calls
upon national banks. In the circumstances, you may advise each
State banking department in your district that, in the absence
of advice to the contrary, it may feel reasonably certain that
a call for condition reports will be made upon State bank members whenever .the Comptroller of the Currency calls upon
national banks for such reports. It is understood that the
Comptroller's office advises every State banking department of
each national bank call date by confidential. telegram about two
days before the call is publicly announced.
Very truly yours,
(Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretary •
•
•
BOARD OF" GOVERNORS
DF' THE
FEDERAL RESERVE SYSTEM
S-263
WASHINGTON
ADDRESS DF"F"ICIAL CORRESPONDENCE
TD THE BDARD
Mav'
13, 1941
Dear Sir:
Referring to Mr .. Draper 1 s wi.re to you of
May 9, 191;.1, 1elating to the establishment of Priori-
ties field offices in a number of important cities,
there are attached for your information copies of a
letter dated May 8 and a 1:1emorandum dated
Uay 9, 1941,
from Mr. Francis J. Tracker, Acti:1g Chief, Defense
Contract Service, and a
co~J
of the Board's letter
of May 12, 1941, to Mr. Trccker, all of which are
self-eA~lanatory.
Very truly yours,
~hi~
Chester Morrill,
Secretary.
Attachments 3
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
295
S-263-a
Social Security Building
Washington, D. c.
lVlay
!j,
1941
Governor Ernest G. Draper,
Board of Governors of' the
Federal Re9erve System,
Washington, D. G.
Dear Governor Draper:
The Division of Priorities some time ago requested permission to use the Defense Contrect Service field offices as distribution points for contracts and preliminary inforn;ation on priorities.
These duties have been carried on up to the present time. However,
the tremendous impact and the necessary technical and detailed training required to handle .J,Jriorities vroblems made it necessary that
more adequate and especially pr:i.orities tJ'ained pa:rsom.el be in the
field to give first hand advice to the manufacturers.
Due to the above reasons, it was decided by the Priorities
Division to ask the :Federal Reserve System to make available to them
space so that priori ties could install their own personnel. Mr. Philip
D. Reed of the Priorities Division has asked m•:3 to ·convey to you the
.t'riorities Division reG.uest for space and acco:nmodations similar to
that which you have so kindly extencied to the Dv3f'ense Contrect Service
Section of the Office of .Production li.ianag·.Jmsnt.
•
.. ~
It is their intention to establish in the following cities
.Priorities field offices:
Boston
New York
Philad.elphia
Atlanta
St. Louis
Chicago
Cincinnati
Cleveland
Denver
San Francisco
J:littsburgh
Dallas
Detroit
Los Angeles
Seattle
These field offices, it is pro 1)osea, will work in close coordination with the Defense Contract Service. However, authority f'or
their actions, financing, ana similar J:)roblems will be hand.led entirely
and directly from Washington Division of ~riorities.
QuotaUon from their letter of transmittal to us outlining
their proposed set-up is as :t'ollows:
"Our present plan is to have in each of the indicated offices a District .Mana~er, an Assistnnt to t.be District
Manaeer, a Product ion and Inventory J.IJ~elyst, and a secre ...
tary to the District Manager. As more field work is
•
S-263-a
-2-
"required in the administration of additional mandatory controls i.m.posed by the Division, there will undoubtedly be an
increase in the number of production and inventory analysts,
especially in the 10 or 1.2 large:3t cities, and this should
be borne in mind."
Furthennore, it is the Priorities Division's plan at the
start to have the men in the aboYe mentioned cities cover an area as
large as necessary around that city so as to be of service to all of
the present established Defense Contract Service offices. Their memorandum further states that they would like to have it planned in the
future to expand into other cities in which Defense Contract. Service
is established as needed.
As discussed in the meeting between representatives of Defense Contract Service and Priorities Division, it is the plan to.
have the Priorities- staff directly tutder the control and on the pay
roll of the Priorities Division. Priorities entire agreement with
Federal Reserve is to be similar to the agreement between Defense Contract Service o.nd the Federal Reserve Syster:t, narnely, that all pay
roll is the responsibility of the Priorities Division, including clerical and secretarial help. It is further understood that the B.:mks
will not be r•.Jimbursed for the use of spo.ce, if available, in the Federal Reserve Bank and Branch Bank buildings nor for the use of Federal
Reserve office equipment loaned temporo.rily to the Priorities Division
by the Bank, but the Bank will be rein1bursed for rent paid for outside
office space and for office equipment purchased for the account of the
Office of Production Management Priorities Division for the use of Priorities activities.
.
...
It is recommended that the Priorities Division and the Federal Reserve System meet to determine the method of financial reimbursement from Priorities Division to the Federal Reserve System in
case office equipJilent be needed and also fo::: determination of policy
concerning all expenses connected therewith.
Would you be good· enough to transmit this letter to the Board
of Governors? We would appreciate confirmation that this letter clearly
sets forth the understanding betvmen Priorities Division, and the Federal Reserve Banks and is similar to the present existing agreement between Defense Contract Service and the Federal Reserve System.
(Si 6nod)
Francis J. Trecker
Francis J. '£reeker, Acting Chief,
Defense Contract Service.
297
S-263-b
OFFICE OF PRODUCTION MANAGEMENT
Social Security Building
Washington, D. c.
Mey
9, 1941
ME.i\iORA.NDUi,l
1'o:
Governor Ernest G. Draper
From:
Francis J. Trecker
This memo:.·andum is directly connected with, and should be
attached to, the letter of f.ley 8 from Francis J. Trecker to Governor
Ernest G. Draper, Board of Governors of the Federal Reserve System,
which was written to outline the proposed working agreement between
the Division of Priorities, Office of Production Ma..Ylagement, the
Federal Reserve Ba...."lk System, and the Defense Contract Service.
In the above-mentioned letter, it is stated that "Priorities
entire agreement with Federal Reserve is to be similar to t.he agreement between Defense Contract Service and the Federal Reserve B,ystem,
name]..y, that all pay roll is the responsibili t:r of t.1e Pr·iori ties
Division, including clerical and secretarial help."
..
This statement should be enlt~ged to cover the fact that
the Defense Contract Service agreement provides that the Federal
Reserve Banks pay the salaries of tho Coordinator's staff and, in
turn, are reimbursed later qy the Defense Contract Service. In the
case of the Priorities Division, it is intended that Priorities'
agreement will differ from that of the Defense Contract Service in
that Priorities' staff, including District Manager, his assistant,
clericrLl and stenographic personnel, will be paid di~ectly from the
Priorities D;i.vi~ion in Wt'.shington, and the Federal Reserve Bo.nks
will have no financial pcy roll to carr;r for the Priorities Division •
(Signed)
F. J. Trecker
FHANCIS J. TRECKZR
298
S-263-c
May 12, 1941
Mr. Francis J. Trecker, Acting Chief,
Defense Contract Service,
Production Division,
Office of Production Management,
Social Security Building,
Washington, D. C.
Dear Mr. Trecker:
Your letter of May 8, 1941 and your memorandum of
May 9, to Governor Draper, with respect to the establishment
•
•
and maintenance of local field offices of the Division of
Priorities of the Office of Production Management at certain
of the Federal Reserve Banks and Branches, have been presented to the Board of Governors. The Board has authorized
me to advise you that the Federal Reserve Banks are prepared
to furnish space, if available, and render the services requested to the Division of Priorities under the same terms
and conditions they now render service to Df:lfense Contract
Service of the Office of Production Management, subject to
the understanding stated in the last paragraph of your memo ....
randurn of May 9, 1'141. It is understood that persons on the
Pl·iori ties staff assigned to duty at a Federal Reserve Bank
or Branch will be satisfactory to the District or the Area
Coordinator and to the President of the Federal Reserve
Bank.
Very truly yours,
-
(Signed)
Chester Morrill
Chester Morrill,
Secretary.
299
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
S-264
Sec. 5136 R.S.-18
WASHINGTON
ADDRESS DP'P'ICIAL CDFIIFIIES .. DNDENCE
TD THE 80AFIID
May 21, 1941
Dear Sir:
There is enclosed for your information a copy of
a letter dated May 13, 1941 from Mr. C. B. Upham, Deputy
•
Comptroller of the Currency, advising that the Office of
the Comptroller cf the Currenqy recently has taken the position that bonds of the Port of New York Authority and
bonds of the Triborough Bridge Authorit:t of New York are
not "general obligations of any State or of any political
a
subdivision thereof" within the meaning of that term, as
used in section 5136, U.S.R.S.
It is suggested that this
matter be brought to the attention of the examiners for
your Bank.
-
1. P. Bethea,
Assistant Secretary •.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
300
S-264-a
Sec. 5136 R.S.-18
TREASURY DEPARTMENT
CoJl!E...troller of the Currency
Washington
May 13, 1941
Board of Governors of the
Federal Reserve System,
Washington, D. C.
Gentlemen:
•
•
•
..
Reference is made to your letter of April 29, 1941, relative
to the bonds of the Port of New York Authority, New York, and bonds
of the Triborough Bridge Authority of New York. You state that you
have been advised irlformally that this office has taken the position
that such bonds are not general obligations of any state, or of a.eypolitical subdivision thereof, within the meaning of section 5136 of
Rev. Stat. of 1873, as amonded (u.s.c. title 12, sec. 24), and that
member banks are subject to the limitations and restrictions contained in section 5136 as to dealing in, underwriting, and purchasing such securities. You desire a verification of your understanding
and ask, if this office can convenient~ do so, to be furnished with
copies or a statement of the substance of the rulings or letters of
this office in which the positions indicated were taken.
This office recently has taken the position that bonds of
the Port of New York Authority and bonds of the Triborough Bridge
Authority of New York are not "general obligations of any State or
of a~ political subdivision thereof" within the meaning of that
term, as used in section 5136. We hereinbelow quote a ~pical reply that has been made by this office to national banks making inquiries in this respect.
"National. banks are governed in the purchase of investment securities b,r the provisions of section 5136 of
Rev. Stat. of 1873, as amended (u.s.c. title 12, sec. 24)
wherein certain exemptions are provided to the basic 10%
limitations imposed thereb,y. It is believed that the
bonds in question do not qualify under any of the exemptions thus provided. However, it is the position of this
office that the bonds of the Triborough Bridge Authority
of New York and the Port of New York Authority, New York,
meet the requirements of section 5136 and the regulations
of' the Comptroller of the Currency issued thereunder
301
S-264-a
Sec. 5136 R.S.-18
within the 10% limitations of this section and m~ be purchased by na.tional benks within such limitations. 11
•
As you no doubt are aware, this position is a reversal of~ 1
a position taken by this office some years ago with 1·espect ·to these
bonds. Inasmuch as some banks, in the light of our former riling,
m~ have purchased such 0onds in excess of their la$ limitations
under section 5136, this office has followed the policy in administering this new riling, of calling any such excess to a national
bank's attention, when found to exist in their bond portfolio, with
the instructions that the bank should dispose of their excess holdings therein whenever they can do so without loss, rather than requiring that disposition be made of such bonds immediately, It is
believed that such. a process will r~sult in a gradual, rather than
a sudden liquidation of any excess amount of such bonds which m~
have bee>1 purcho.sed l:w banks under our former ruling.
•
Very truzy yours,
(Signed)
c.
B. Upham
Deputy Comptroller
I.
302
S-265
Reg. P-17
INT'i!FPRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
.May 15' 1941
Mr.
, Vice President,
Federal Reserve Ba.llk of _ _ _ ,
Dear Mr •
•
•
•
-·
This refe~s to you~ letter of April 9, 1941, relating to
the holding company affiliate ste.tus of
County Trust Company,
'--·
On No·\Tember 7, 1935,
County Trust Compan..v was determined by the Board not to be engaged, direc·cJ.:" or indirectly,
as a business in holding tho stock of, or managing or controlling,
banks, banking associations, savings banks, or trust companies,
within tho moaning of section 2(c) of tho Ba..l'lking Act of 1933. It
is the Bourd 1 s view that :::;~.lch a detarminn.tion with respect to an
organization continues in effect il1.defi.Tlitely in the absen..:;e of a
contrary determination and that it governs the st~.:~.tus of the organization as a holding company affiliate not only of the be.nks
which were subsidio.ries at the time of the determination but also
of ba~ks whiJh become subsidiaries thereafter. Whil0 the Boa.ru
retains the right to m&ke a new determination at any time upon the
basis of the t:tan existing facts, there is no i)Ccasion for action
cy- the Board where, as in this case, there is no change in the
facts such as would indi..:;ate that the org~~ization in question
might be deemed to be engaged, directly or indirectly, as a business in holdirig the stock of, or mrumging or controlling, banks,
banki..~.g associations, savings banks, or trust compan.les.
Very truzy yours,
(Signed)
L. P. Bethea
L. P. Bethea,
Assistant Secretar,y.
S-266
Reg. F-27
INT~1PRETATION
OF LAW OR REGUIJiTION
(Copies to be sent to all Federal Reserve Banks)
May 16, 194l
, Vice President,
Federal Reserve Bank of
,
l'vlr.
Dear Mr.
----·.
Enclosed is a copy of a letter of April 3, 1941, from Mr.
_ _ _ , Trust Department,
Trust Company,
,
,
relating to the intarpretatio~ of the underscored portion of the
following provisions of section 17(c}(5) of Regulation F:
nNo funds of a.v trust shall be invested in a participation in a Common Trust Fund if such investment would result in such trust having an interest in the Common Trust
Fund in excess of 10 per cent of the value of the assets of
the Common Trust I<'u..'ld, as determined by the trust investment committee, or the sum of $25,000, whichever is less at
the time of investment. * .,~ * In appging the limitations
contained in this. pa:rag::.~a.ph. if two or more trusts are created l1r the same settlor or settlors and as nmch as onehalf of the income or principal or both of each trust is
ps.yable or.applicable to }he use of the same ~rson or
persons, such trust shall be considered as one."
•
After a careful study of the questions presented Qr }!r.
and other related questions, which has necessitated some de.,.
lay, it is the Board's conclusion that th~ two trusts should not be
considered as one for the purpose of the above-quoted provisions of
the regulation in either of the following situations described by
-=---~
him:
..
(1) A settlor creates two trusts of $25,000 each.
In one trust the life tenant is 'A', and in the other
the life tena..."'l.t is 'B' • Upon the death of each life
tenant, the principal in each trust is payable to 'C' •
11
11
(2)
A settlor creates two trusts of $25,000 each.
In one trust the life tenant is 'A' , upon whose death
the pru1cipr.l is p~able to 'C' • Tne life tenartt of the
other is 'B' , upon whose death the prL'lcipal is payable
to 1D', or if 'D' be not living, to 'C' •11
303
-
'
~
-2-
S-266
Reg. F-27
It is understood, of' course, that the informc.tion submitted was complete and that there are no additional facts with respect to powers
of revocation or otherwise which might have a bearing on the matter.
It will be appreciated if you will advise Mr.
in
accordance with the foregoing. He has been advised of this reference.
Very t:ruly yours,
(S!gned}
L. P. Bethea
L. P. Bethea,
Assistant Secretary •
..
305
BOARD OF GOVERNORS
OF" THE
S-267
Reg. P-18
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS DF'F'ICIAL CCRRESPDNDENCE
TD THE SDARD
May 22, 194i
..
Dear Sir:
For your information there is enclosed cop,y
of a letter which the Board recentlY addressed to a
Federal Reserve Bank relating to the question as to
whom copies of the report of examination of a certain
holding company affiliate should be made available.
This letter also amends that portion of the Board's
letter S-238 of. November 15, 1940 (F.R.L.S. #7235)
containing general instructions regarding data which
should appear in the open and confidential sections
.
of reports of examinations of holding company affiliatcs •
...
L. P. Bethea,
Assistant Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE
Digitized'for FRASER
BA.~KS
S-267-a
Reg. P-18
May 19, 1941
lv'lr. _
, Vice President,
Federal Reserve Bank of -----------Dear 11r.
:;
Reference is made to your letter of February 26, 1941, and
. subsequent correspondence regarding questions as to whether a copy
of the report of examination of
Corporation,
,
________ , should be made available to the Chief National Bank Examiner of the
Federal Reserve District, the extent to which the
report may be made available to the State banking departments and supervising examiners of the Federal Deposit Insurr.~nce Corporation, and
whether the report, except the confidential section, should be submitted to the board of directors of the holding company affiliate. ·
VJhen a. simultaneous eX<.1.1Il.ination is made of a holding company affiliate and its affiliated banks and other organizations in
cooperation vnth the examiners of other supervisory authorities, the
Board feels, particularly in view of paragraph numbered 4 of the application for voting permit executed by the holding company affiliate, that information contained in the report should be made ava~le
to other supervisory authorities as in your judgment their respective
interests may appear. In view of the large number of national banks
in this group and the cooperation by national bank examiners in the
examination, it is felt that a copy of the report of examination may
properly be delivered to Mr.
, as requested by him, for his information and use as Chief National Bank Examiner of the
Federal Reserve District. The Board m.D.kes available to the Comptroller
of the Currency and the Federal Deposit Insurance Corporation in
Washington its copies of reports of examination of holding company
affiliates and their affiliated banl{S and other organizations made
by examiners for the Federal Reserve banks in all cases where such
agencies have an interest in [illd request such reports.
-
You are authorized to submit a copy of the report of examination, except the confidential s'3ction, to the board of directors
of
Corporation. In the last paragraph of the Board's
letter of November 15, 1940 (S-238), general instructions were given
regarding data which should appear in the open section of reports of
examination delivGred to the boards of directors of holding company
affiliates and data that should appear only in the confidential section. These instructions are herewith arnended and restated as follows.
Data concerning a holding company affiliate and its affiliated .?.nd closely related banks and other organizations obtained by
306
-2-
S-267-a
Reg. P-18
an examination of the holding compa.r>.y ,;affiliate itself should be contait1ed in the open section of the report of examination of the holding
company affiliate. Data obtained by examination of a holding company
affiliate's subsidiaries or from reports uf exar~nation of such subsidiaries n~de by other supervisory a~thorities should be contained
in the open section of the report of examination of the holding company affiliate to the extent considered necessa1y or desirable. Of
course, any information which is of a confidential nature, including
such information obtained from or ordinarily contained in the confidential section of a report of examination of a bank, should not be
included in the open section of a report of examination of a holding
company affiliate. Information obtained by examination or from reports of examination of noncontrolled banks or other organizations
which are affiliated with or closely related to a holding company affiliate or its subsidiaries ordinarily should not be included in the
open section of a report of exrunination of the holding company affiliate. However, in some circumstances it may be necessary to include
general comments on or sumrilaries of such information as a basis for
criticisms of relationships between the holding company affiliate and
such organizations. Details regarding such information m.-:.y, of course,
be included in the confidential section of the report of examination.
When it is necessa:r; to quote or paraphrase the contents of
a report of examination of a bank or other organization, care should
be exercised to avoid embarrassment which may result therefrom to the
examiner or the supervisory authority responsible for such report.
In order to avoid possible violation by the examiner of section 22(b) of the Federal Reserve Act, the open section of the report
of exaw~nation of a holding company affiliate should not disclose the
names of borrowers or the collateral for loans of a member bank or insured bank obtained by examination or from reports of examination of
such bank. Any significant information regarding such loans that
should be called to the attention of the management of the holding ca:npany affiliate should be covered by means of general comments or summaries in the open section. Such detailed information as is considered
to be necessary regarding loans of the banks in the group, particularly
loans secured by stock of the holding company affili2.te and loans to
directors, officers, and employees of organizations in.the group and to
their interests, should be included in the confidential section.
Very truly yours,
(Signed) L. P. Bethea
L. P. Bethea,
Assistant Secrctar,y •
•
301
•
BOARD OF GOVERNORS
s-268
DF' THE
308
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OF'F'ICIAL CORRESPONDENCE
TO THE BOARD
...
May 29, l9L~l
•
')
Dear Sir:
In view of the recent establishment of Coordinators'
Offices at Federal Reserve Ba~~s and Branches certain questions
have arisen with respect to tho monthly reports of defense activities furnished me in response to our letter of December t;, l9l..t.O,
S-2LO, as modified by our telE'gram of January 8, l9hl.
It will be appreciated if you ¥.1ill have the Defense
Contract Officer at yo·ur Head Office continue to forward to me
for the present a monthly roport covering his activities and the
activities of the Federal Roscrve Def(,nso Contract officers at
your Branches, if any. The report should reach the Board's
offices not later than the tenth of each month. As in tho past,
the report should set forth any intcr0sting developments during
tho nJOnth that it is thought worth while to bring to our attention. The report should also SE;t forth briefly any difficulties
that were experienced during the month, particularly with respect
to difficulties, if any, encountered in obtaining financing, and
·whether in your opinion anything crm be done by our office to
facilitate the work.
It will also be appreciated if the Defense Contract
Officer will corr~ent briefly in his report on any noteworthy
activi tics of tho District Coordinators' Offices and of the
offices of the Priorities Division (when established) that come
to his attention.
Very
truly
yo~, • .~
Ernest G. Draper.
•
S-269
Reg. R-4
INTER.PRETATIQN QF LAW OR REGULATION
(Copies to be sent to all Federal Reserve
~anks)
MS¥ 26, 1941
•
Mr.
, Vice President,
Federal Reserve Bank of
,
_______________,
Dear Mr.
.
•
•
--------------~
:
Reference is made to your letter of May 1, 1941 and the enclosed copies of correspondence and two opinions of your Counsel relating
to the question whether section 32 of the Banking Act of 1933 is applicable to Mr.
"X" who is an ·officer and director of "B" Investment
Company and of "A" Investment.· Corporation and a director of ("M"
National Bank) ,
, and to Mr. _ "Y" • who is a director of "A"
Investment Corporation and a director of J~ti" Nationcl Bank) ,
It appears that "A11
Investmer~ot Corporation and
"B"
Investment Compaqy are organizations of the kind sometimes called "investment trusts".
"C" Securities Compcmy, a wholly-mmed subsidiary of
the former, was'apparently created for the purpose of selling and distributing the shares of the former, and after all of such shares had been
sol,d,
"B" Imrestment Company was organized and the principal activity
of "C" Securities Compllr.IY is now the sale and distribution of the
shares of · "B" Investment Compaey-, for which it receives a premium of
S per cent of the offering price. The portfolio of "B" . Investment
Compaey- is managed tu "A" Investment Corpor(l.tion, for which the latter receives a quarterly fee of 1/S of 1 per cent of tne asset value of
the outstanding shares of the former. A fourth organization in the group,
-~- Fund, was organized to handle installment sales of the shares of
"B" Investment Company, but is no longer active.
For the purpose of his opinion, your Counsel treats
"A"
Investment Corporation and "C" Securities Company as one, and he further states that it appears from the information available that the
"B" Investment Compaw wo.s created at the direction of, and exists
onq as a convenience and s9urce of income for,
"A" Investment Corporation. Therefore, it would appear to be proper to consider all three
organizations o.s one in determining the applicability of section 32.
As stated above,
"A" Investment Corporation is no longer
engaged in issuing or distributing its shares, but "B"
Investment
Company is so engaged 1 through the mediUlll of "C" Securities Company.
During 1939, 47,442 shares were thus sold, and during 1940, 10,088 were
sold. During these two years a total of S7,206 were redeemed, and at the
end of l940 there were 431,233 shares outstanding. The~efore the case
has maDf points of similarit,y with that discussed in the Federal Reserve
3()!
•
-2-
S-269
Reg. H-4
Bulletin for 1941 at page 399 (F.R.L.S. #7610), the principal difference
being the volume of sales.
•
•
•
On this point, however, your Counsel expresses the opinion
that a decision as to whether or not a. corporation of this kind is "primarily engaged" in the issue, flotation, public sale or distribution of
securities should not be predicated upon the volume of sales effected
during a given period, but upon the purpose for which the corporation
is organized and operated, the manner in which it functions, and the
sources from which it deriv~s its operating revenue, because otherwise
it could be said, during a period of depression when sales were at a
low ebb, that it was not "primarily engaged" in the business described
in the st.o.tute. In other words, the purpose o.nd functions of the organization are the important factors, and although the.y m~ be apparent from
a large volume of sales actually effected, they mcy be apparent from a
number of other fo.cts (including, for example, the extent of the sales
organization maintained by the corporation and the extent of its sales
efforts) even in the absence of a large vol~~e of sales.
With respect to
"B"
Investment Company your Counsel concludes: "The structure, hMory and purposes for which this organization was organized, the manner in which its operating capital is acquired,
and the manner in which it functions, in mf opinion, mark it as a corporation 'primarily engaged' in the issue, public sale and distribution of
its stock." He further concludes that section 32 is applicable both to
Mr.
"X"
and Mr.
"Y"
On the basis of the information submitted, the Board sees no
reason to dif'f0r with this opinion. Incidentally, since the amendment
of section 32 by the Banking Act of 1935, the Board has not regarded
"turnover" in the portfolios of such organizations (as distinguished
from underwriting, distributing, etc.) as constituting the kind of business described in the section. Hov1ever, it does not appear that this
affects the opinion above stated •
•
Very truly ynurs,
(Signed)
•
..
L. P. Bethea
L. P. I3ethe<J.,
Assistant Secretary •
31.(
31.1
BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
s- 270
WASHINGTON
ADDRESS OI'P'ICIAL CORRESPONDENCE
TO THE BOARD
June 16, 1941
Dear Sir:
•
.
There have been forwarded to you today under separate cover
the indicated number of copies of the following forms, a copy of each
of which is attached hereto, for the use of State bank members and
their affiliates in submittinc reports as of the next call date:
Number of
copies
Form F.R. 105 (Call 87), Report of condition of State
bank member.
Form F.R. 105b (Revised August 1939). Loans ·and advances
to affiliates and investments in and loans secured
by obligations of nffili~tes.
Form F.R. 105e (Call 87), Publisher's copy of report of
condition of State bank member.
Form F.R. l05h (Revised June 1939),Branch bank report
of condition.
Form F.R. 105-i (Schedule "A.l"), Retail installment pnper.
Form r.R. 220 (Revised August 1935), Report of
or holding comp~~y affiliate.
affili~te
Form F.R. 220n (Revised Decenilior 1938), Publisher's copy
of report of affiliate or holding company affiliate.
Form F.R. 220b (Revised February 1938), Instructions for
preparation of reports of affiliates and holding
company affiliates.
No change has been made in any of the forms listed above
since the lest time they wore used.
,.
.,
-
S-270
~2-
•
"
It is suggested that the schedules of personal and retail
installment paper (form F.R. 105-i) of all member banks (national
and State) be scrutinized to see i f the figures &.ppear to be reasonable, consistent ·with the genE~tal cla.ssifica.tion of loans shown in
Schedule A, and comparable with the corresponding data reported as
of December 31, 1940. If you have occasion to send letters on this
subject to national banks, it is suggested the.t copies thereof be
sent to the Comptroller of the Currency and that the national benks
be requested to advise the Comptroller and your Bank of any corrections that may bo necessary.
Under existing instructions, each Federal Reserve Bank
furnishes the Board, within thro<Sl weeks of the date on whj_ch tho
call for condition reports is announced, -~th a summary stat0ment
showing the ~1ounts of asset itons 1 to 5. inclusive, as reported
by central reserve city member be.nks, rosorve city member banks,
and country member banks, respectiv-ely. It will bo appreciated if
you will have this summery subdivided hcronfter so as to show separately figures for national ba.."l.ks and State bank members, respectively, in central reserve cities, in reserve cities, and outside
such cities.
Form F.R. 105h, it will be noted, is unchanged from June
1940, when branch reports were last required. Reports on this form
should be submitted in duplicate by each State bank member, ·which,
according to Schedule DD, operates one or more domestic branches.
No copies of this form need be sent, of course, to any St&.te bank
members that do not appear to h&ve branches.
--
Carpen er,
Assistant Secretary.
Enclosures 6
TO 'r:HE PRESIDENTS OF .ALL F'lWERAL RESERVE B.AlTKS.
312
31.3
•
S-271
Reg. L-16
INTERPRETATION
or
LAW OR REGULATION
(Copies to be sent to all FeU.eral Reserve Banks)
•
June 12, 1941
"
Mr.
--------'
Chairman of the Board,
--------Bank,
-----'
Dear Sir:
Receipt is acknowledged of your letter of June 4,
1941, inquiring whether the provisions of section 8 of the
Clayton Act relating to interlocking bank directorates are
applicable to three mutual savings banks which have recently
become members of the Federal Reserve 8-,fstem.
T':J.e statute prohibits interlocking directorates between a member bank and certain other types of banks, but provides that the "foregoing prohibition shall not apply in the
case of any one or more of the following * ->~- ~k ( 7) a mutual
savings bank having no capital stock."
Therefore, in v-ie-rt of the fact that none of the
three mutual savings banks wh1ch have recently become members of the J''ederal Reserve System hap capital stock, the
provisions of section 8 of the Clayton Act are not applicable to interlocking relationships between those banks and
other banks.
Very truly yours,
{Signed)
S. R. Carpenter
S. R. Carpenter,
Assistant Secretary.
S-272
Reg. F-28
INTEPYRETATION OF LAW OR REGULATION
(Copies to be sent to all Federal Reserve Banks)
June 2J, 1941
Mr.
·'
First Vice President,
Federal Reserve Bank of ____ ,,
----------------'
-------·(
Dear Mr.
This refers further to your letter of .June 6, 1941, in
which you state that one of the trust companies in your district
which is contemplating establishing a Common 'i'rust Fund has requested advice as to whether, in the periodical valuaticn of the
assets in a Common Trust Fund, Series G savings bonds of the United
States should be valued at par ~nich is their cost and ultimate tnaturity value, or at their redemption value at the time of each va.luat.l.on. These bonds are not transferable ~md, therefore, their
liquidation value at an,y particular time is the ::Utl.ount at which
they can be redeemed at that tin1e.
The Board's Regulation F rfJlating to Common Trust Funds
operated under the provisions of section l?(c) of Regulation F requires that the written plan for the operation of each such Fund
shall include, runong other things,detailed provisions relating to
the basis and method of valuing assets in the Fund, but the regulation does not undertake to prescribe c~ precise method of valuation. However, one of the principal rt-:.a.sons .for the requirement
in the regulation that the o.ssets of such a Common Trust Fund be
valued periodically is to determine the amount which·a participating trust may vd. thdraw on the valuation date and to deterr.1ine the
basis upon which new participations may be issued to trusts on
such date. In the circumstances, it would seem to the Board that
the most appropriate basis f'or valuing Series G bonds for purposes
of such a Common Trust F'und would be the redemption va.lue of such
bonds. This conclusion has been checked informally with officers
of trust companies in other districts w"l:"dch are operating Common
Trust Funds and they agreed with the conclusion.
Vary truly yours,
(Signed) L. P. Bethea
1. P. Bethea,
Assistant Secretary.
314
315
BOARD OF GOVERNORS
s-273
Of" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
June 30, l9L~l
Dear Sir:
In my letter, S-2r::;3, of l~arch ll, 191+1, you were advised
that District and Division Contracting Officers of the 1n~ineer
Corps would request yol'r Bank e.nd Bra:'ches, if any, to furnish
them from tine to time with confidential reports regarding contractors being considered for construction projects. In view of
the recent declaration by the President of an unlimited National
F1rr.ergency, it is the desire of' th<:' War .LJcpartment that everything
possible be C.one to expedite the ar:proval by the Under Secretary
of War of requests fo:r advance paj'1nents rccei ved from concerns
awarded contracts by the Y!a.r D0partment for supplies or construction.
Under date of June 30, 19Ll, n mer.ora.ndurr, was addressed
to thf_· Chiefs of thE· Supply Arms B-nrl Services, by direction of the
Under Secretary of War, signed by Brigadier Gt:neral John W. N,
Schulz, Director of Purchases and 0ontrncts, a copy of which is
c-ncloscd. This merr:ora.ndum advises that e.ll contracting officr::rs
of the' Suppl:,' .Arr;~s e.nd Servic cs of the liar Depe.rtmont should
support their approval of' requests f'or advanc€:' paym<nts by sufficient inforrne.ti on regarding the· financi8.l position of contructors
to enabl{; the Under Secretary to pass upon such requ..-,sts vri thout
further investigation, except in unusu1.1l ct..s0s. The memorandum
further sugg:ests that such inforr..Ltion ce.n best be obtained from
the Federal Res•rve B&nks v,nd Branches.
Following conferences with officials of the Office of
the Under Secretary of 1Ne.r, it is suz~cstrd that thr rc·port of a
F':'deral Rq;ervc Br;·.nk contain inform:~ ti on ~:-..s to tht. recnageJ:lEmt and
reputation of the contracting company, a current be, lance sheet, Lnd
S-273
- 2 a mon~hly forecast of disbursemer:.ts for me..tcria.l, htbor, etc.,
and the expected receipts for goods dcliver<"d under the contre.ct.
Such information vrill be helpful in ddermining the c.mount ner::ded
by the concern during thP pc;riod of performance of the contract.
It is c.lso suggested that afte:!" r'viev:ing the fie;ures and mc.king
c..ny necessary investige.tion, your Be.nk include i:J. its report, if
prL-cticc.ble, f,n opinior. u.r to whether or not the e.dvance po.yment
requested should provide cdequo.te ::Uncts :f'or performo.nce of the
contru.ct.
Your cooperation
·~.111
be
v-~ry
Very
much c.ppreciated.
tf
yours,
~:r,.~
Ernest G. Draper.
Enclosure
·~
TO TEE PRESIDEhTS OF ALL FLDEFAL RESFRVE BANKS
316
s-273a
c 0 p y
WAR DElARTJ.:EKT
OFFICE OF Th"E UNDER SECRETARY
Washington, D.C.
June 30, 191:.1
1ZLORANDU!>: for The
The
The
The
The
The
The
The
The
The
The
SUBJECT:
Chief of the Air Corps
Chief, Chemical W~rf£-re Service
Chief of Coast Artillery
Chief of Engineers
Chief of Finance
Judge Ad'lrocE.te Genert.l
Chief, Nc..tionf;;.l Guard Buref'.u
Chief of Ordnance
~~rtermaster General
Chief Si[nnl Officer
Surgeon Gener~l
Advance Pt::.yments to Contractors on Supply Contracts
1, In view of th~ declaration by the President of un
unlimited Nntior..E'.l Emergency t...nd in order that evc·rythir.g: possible be
done to expedite the o.pprov(~l of the Under Secretf',ry of War to requests
for o.dvo.nce paymE"nts, it is c onside·rcd desirable th~~t the follo1A'ing
be brought to the attention of contrr.cting officers:
a.
Approve,l of requests for e.dvance pLyments V':ill be
expE>di ted if o.n Lpproved form of ndvance pt;cyment
provision~ (whether in th~ contract or in a
supplernentc.l agree:r.wnt) is used nnd ('S few varic. ti ons
as possible o.rf. ~adc therefrom. Enclosed are approved
ferns of Articlr- end of supplementc.l f',grcement
providinG for ttd"\•~::..nce pc.yn:m1ts on fixod price contracts,
ns well o.s nn t:;.pproved form of supplE>:m.enttcl agreement
providing for advance pu.~rments on cost-plus-e.-fixed-fee
contracts.
These t:cpprov~::·d forms of r.cd'Vt.nc~>. pt...yrnent provl.Sl ens nre
not new but £ere ide·ntic~l with "those promulgated by
ve.riou~ supply E.\rms [<Tid services.
It is not intE'nded
hereby to restrict the use of other for:r·1s now in gener~l
use.
The r~quest mt::.y bE' uccompunied by thf' exo.ct c.dvance
payment provisions to be used; mc.y stv.to:: thct nn
317
318
S-273a
approved form is to bf used; or rr:ny stc.tc th~::~t o.n
approved forn1 is to be used with n1.riations, st,.ting
the reasons for the variaticns.
b.
If the c ontn~ct reqvires unusu['l prov1.s1:ons as a result
of addi ti ona.l finr~ncing arrangem-:;nts vri th the Reconstructivn
Fi:'.t:mce Corporcticn, a Federal Reserve Bc.nk or privntc
financing institutions, the form of t:tdvance pe.ymcnt
agre[%ent, if the chief of the supply r,rm or serYicc
so desires, m~;~y be negotiated by the Office of the Under
S':crchry of We:.r in colla.bon~tion with the office of
the chief of the supply arm or s~rvice concerned, or
with the contracting officer.
c.
In cases where a. contre.ctor ht.s mc·n' thc;.n one contrE,ct
with a. supply arm or service ar:d segregation of roaterials
and separate accountinc between tte contracts are difficult
or impracticable, the agreemer.t ve.y provide for advance
pa;yments on one or more than onr-: of the contracts and
may perrni t the usc of such a.dve.nce ;:a:yrr:ents on any or
all of the contracts.
d. The question of udequacy of security for e.dvance paym!')nts
is one requiring the exerCise o:" sov.nd discretion c.nd
there is no requirement thct l.n cdvs.r:ce }Jl:yment bond
be furnis:'led ir every cecs"·· Con·cn~cting: officf'rs v:ill
not rcq1.1ire such bonds unlc ss in their judg;m<::nt tho
circumstnncos of the p&rticuls.r casf so roquirc.
e. It is necessary to ths npr;rove.l of f. rE·qu~Cst :C'or advr::.nce
payments that the Uncer Secretcry of Wc.r be satisfied
the. t the C.InOUnt of the adVG.!lCC pc..;y-mcnts together vri th
the contr£,ctor' s own funds c.nC'. such other fimmcing c.s
he co.n obte.in will bE suf'ficic•nt to en&blc hirr. to
per forrr. the contrnct. In f'urthere.ncc of U:e policy of
decentrc.lizo.tion, contractinf officers should support
their c..pprcve.l of requests for £..dvc.nce pc.yme!lts by
sufficient inforrr.&tion rcce,rding the fino.ncic.l position
of contractors to enable the Under SecretG.ry of War to
pnss upon such requests without further invcstigLtion
except perho.ps in unusu£..1 cases. Such informuti on can
best be obtained from the Fedcrt.l Reserve bu.nks, the
fr•cilities of which ht'.vc rclrcc.dy been r;:ade f.lvc.ils.ble
to contracting officers for this pvrpose, (See letter
of this office to the chiefs of surply e.rms t..nd services,
dated December 9, 1940, Sub,jcct: 11 Field Cont~ots·~ V'ith
RepresentE,tives cf Federal Rcscnre Bc.nks in conn.cction
with Procurement end Supply'',) Fc.rticu h-rly in cases
of contractors of doubtful finr..nci[:l standing, £• report
from the Fcdor£~1 Reserve bcnk should c.ccorpany the
request for c.dvc.nce pc.ynwnts.
S-273a
f.
Requc:· sts for udvance p('.;yments mc-y br.: r;J.cde c.t e.ny tir:?.e
and rr:.c..y be present·31 for c.pprovr~l oi ther during the
ncgotic.tion of r. contr:::.ct, r.t the tir.,o the contrc-ct
is submitted for c.pprovc.l, or D.t r,ny ti:r-:e thE"•n::c,ftor,
L'-S wi 11 best c.ssi st in expodi ting the cnt,:ring into
.;~nd a.ccorc.plishr.ent of the contrc,ct.
,_.
0
Nothing; herein ccntc.inE·d shs.ll be construed to in £,L.y Wt,y
r.tbrogote the provisicns of letter of this c-fficc to the chiefs of
suppl~{ ur:r:1s c.nd services, dt~ted August 20, 19L~0, Subject:
"Advunco
payments to contra.ctors for supplies or construction".
By directi en cf the Under Secreh<.ry of Wnr:
John W. N. Schulz
Brigudier G<::r.::ral, U. S. Army
Director cf Purchusos end Ccntrc.cts
Er:c s. ( 7j)
Fcrm of udvc,nce r-ayment
Article fer fixed price contracts
Form cf supplc•rrontu.l agrc'cr~ent
for fixed ?rice ccntructs
Fen~ of supplementul t..grecnent
fer cost-plus-c-fixed-f~e ccntr&cts
-3-
319
1
"'
-
B-1252
a
(Revised Apr. 1941)
Officers at Federal Reserve Bonks and Branches designnted
as representatives of the Defense Contract Service Section
of the Uationa1 Defense Advisory Commission and of the
Boord of Governors of the Federal Reserve Systeo. in connection 't'T.i.th the national Defense program.
District No. l - Boston
Mr. E. G. Hult, Assistant Cashier,
Federal Reserve Bank of Boston,
Boston,. Massachusetts
District No. 2 -
~l'ew
York
Mr. L. R. Rounds, First Vice President,
Federal Reserve Bank of New York,
New York, N. Y.
Mr. R. B. Wiltse, Assistant Manager,
Buffalo Branch, Federal Reserve Bank of New York,
Buffalo, New York
District No. 3 - Philadelphia
w. J. Davis, Vice President,
Federal Reserve Bank of Philadelphia,
Philadelphia, Pennsylvania
Mr.
District No.
4 - Cleveland
Mr. R. B. Hays, Vice President and Secretary,
Federal Reserve Bank of Cleveland,
Cleveland, Ohio
Mr. B. J. Lazar, Managing Director,
Cincinnati Branch, Federal Reserve Bank of Cleveland,
Cincinnati, Ohio
Mr. P. A. Brown, Managing Director,
Pittsburgh Branch, Federal Reserve Bank of Cleveland,
Pittsburgh, Pennsylvania
District No. 5 - Riorumond
Mr. R. w. Mercer, Assist~t Cashier,
Federal Reserve Bank of Ridhmond,
Richmond, Virginia
3~0
B-1252
3~1.
- 2 -
District No.
5 - Rianmond {Continued)
Mr. W. R. Milford, Managing Director,
Baltimore BranCh, Federal Reserve Bank of Richmond,
Baltimore, Maryland
Mr. W. T. Clements, Managing Director,
Charlotte Branch, Federal Reserve Bank of Richmond,
Charlotte, North Carolina
District No. 6 - Atlanta
Mr. M. H. B~an, Vice President,
Federal Reserve Bank of Atlanta,
Atlanta, Georgia
P. L. T. BQavors, Managing Director,
Birmingham Branch, Fodernl Reserve Bank of Atlanta,
Bir.mingham, Alabama
Mru
Mr. T. A. Lanford, Cashior,
Jacksonville Branch, Federal Reserve Bank of Atlanta,
Jacksonville, Florida
Mr. J. B. Fort, Jr., Managing Director,
Nashville Branch, Federal Reserve Bank of Atlanta,
Nashville, Tennossoe
Mr. L. M. Clark, Ma.no.ging Director,
Now Orleans Branch, Federal Reserve Bank of Atlanta,
New Orleans, Louisiana
District Uo. 7 - Chicago
Mr. A. L. Olson, Assistant Vice President and Assistant Secretary,
Federal Reserve Bank of Chicago,
Chicago, Illinois
Mr. H. J. Cha.lfont, r:muging Director,
Detroit Branch, Federal Reserve Bank of Chicago,
Detroit, Michigan
&-1252
3~2
- 3District No. 8 • St. Louis
Mr. L.
ij. Carstarphen, General Counsel,
Federal Reserve Bnnk of St. Louis,
St. Louis, Missouri
Mr. A. F. Bailey, Managing Director,
Little Rock Branch, Federal Reserve Bnnk of St •. Louis,
Little Rock, Arkansas
Mr. c. A. Schacht, Mnnaging Director,
Louisville Branch, Federal Reserve Bank of St. Louis,
Louisville, Kentucky
Mr. W. H. Glasgow, Mnnaging Director,
Momphis Branch, Foderal Reserve Bnnk of St. Louis,
Mamphis, Tonnossoo
District No. 9 - Minneapolis
Mr. H. I. Ziomor, Vice Prosidont and Cashier,
Fodornl Reserve Bnnk of Minneapolis,
Minneapolis, Minnesota
Mr. R. E. Towle, Afunnging Director,
Holonn Branch, Federal Reserve Bank of Minneapolis,
Helena, Montana
District no. 10 -
Ka'1SilS
City
Mr. H. G. Leedy, First Vice President,
Federal Reserve Bank of Kansas City,
Kansas City, :.Iissouri
Mr. J. E. Olson, !.lanaging Director,
Denver Branch, Federal Reserve Bank of Konsas City,
Denver, Colorado
Hr. G. H. Pipkin, Uanaging Director,
Oklahoma City BrD.l1ch, Federal Reserve Bank of Kansas Cit7,
Oklaho~a. City, Oklahoma.
Ur. L. H. Earhart, !:lru.1oging Director,
Omaha Branch, Federo.l Reserve Bank of Kansas City,
Omaha, Nebrn.ska
.,
B-1252
~
3~3
- 4District No. 11 - Dn1las
l!r. E. B. Stroud, First Vice President and General Counsel,
Federal Reserve Bank of Dnllas,
Dalla.s, Texas
Mr. J. L. Hermnnn, ff.l!lllo.ging Director,
El Paso Branch, Federal Reserve Bnnk of Dallas,
El Pa.so, Texas
Mr. W. D. Gentry1 :Mo.nnging Director,
Houston Branch, Fedora.l Reserve Bnnk of Dalla.s,
Houston, Texas
Mr. W. E. Eagle, Cnshier,
San Antonio Branoh, Federal Reserve Ba.nk of Dallas,
San Antonio, Texo.s
District No. 12
~
San Francisco
Mr. W. U. Halo, Vico President and Secretary,
Federal Reserve Bank of San Francisco,
San Francisco, California
Mr. H. M. Craft, Assistnnt Ma.nnger,
Los Angeles Brnnch, Fodoral Roservo Bnnk of So.n Francisco,
Los Angelos, California.
Mr. s. A. MacEa.ohron, Assistant Manager,
Portland Branch, Federal Reserve Bnnk of San Francisco,
Portland, Orogen
t~. J. M. Leisner, Assistant ~~nager,
Salt Lake City Branch, Fodora.l Reserve Bank of San Francisco,
Salt Lake City, Utnh
Mr. F. c. Bold, .Assistant Mona.gor,
Sea.ttle Branch, Federal Rosorvo Bank of Sa.n Francisco,
Seattle, Washington
February 12, 1941. ·
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
WASHINGTON
ADDAEBB CF"F"ICIAL CCAAEBPCNDENCE
TC THE BOARD
April 29, 191.~1
Dear Sir:
Attnchcd is e. sta.trt~:vnt showing: th(· present stoc'lc of
19?L~- series n0w Federal Reserve notes of yonr banJr in denominations fror.· ;ho to :)100, inc1usi Ye, the a.rn.ount of such notes
being: printed, c~nd estimated printing rcquirc:rr:•:nts for tho fi seal
year 1942. In arri'lting E-t t the (:.stili-e. ted printing rcquir0mcnts,
as indicated in the attached stc,ton.cnt, we have; tukon tho average
amount of 1928 e.nd 19?h scri cs Federal Rc serve notes of each of
these denominations in circuiE~tion on month ends from April,
19hO, to :Wnrch 191.~1, t\s the reserve stock whioh it is desirable
to muinte.in and tho runount of 1928 r:..nd 1934 series Fcderc.l Reserve
notes returned to tho Comptroller of the Currency in 1940 LS tho
probable roquircrnonts for new issuc.,s during tho fisccl y~;ar 1942.
It ~ill be appreciated if you will advise us at your early con~
venience whether the suggested printing order for your bank meets
with your ~;,pprovul.
In view of existing circumstances it is believed that
tho stock of notes of tho $5 denomination is adequate and it is
suggested the.t requests for printing of' tho ~500 donol!lina.tion
and over be made us and when it becomes necessary. Supplomcntc.ry
~rintings of Federal Reserve notes in deno.rrdne.tions from ~10 to
$100 may, of course, be ordered at any timc 1 should the stock ·
of such notes became inadequate.
Very
~ou~r-s~,-.~
. F,. L.
Smead, Chief,
Di vi si o:n. of B~:mk Operations.
Enclosure
~"0 THE FEDFFAL
RESERVE AGENTS.
@FedFRASER